The latest data from CML regarding the traits of lending in the capital during Q3 2014 has shown that the market grew in both house purchase and remortgage activity compared to Q2.
First-time buyer loans totalled 13,300 in the third quarter in London – 8% up on the previous quarter, and 6% up on Q3 2013. First-time buyers in the period borrowed £3.3 billion – up 11% on the previous quarter and 16% on Q3 2013.
There were 10,600 home-mover loans in the third quarter, up 16% on the previous quarter but 1% down on Q3 2013. Total value of these loans was £3.7 billion, up 18% on the second quarter and 10% on the third quarter 2013.
Remortgage lending in the quarter showed growth in London compared to the previous quarter but down in volume slightly compared to the third quarter last year.
Lending for home-owner house purchase
There were more loans and a higher amount borrowed in Greater London in this quarter than in any quarter since 2007. House purchase lending to home-buyers increased quarter-on-quarter in London totalling 23,900 loans, up 12% compared to the second quarter and the value of these loans totalled £7.1 billion, a rise of 15% on the second quarter. Compared to the third quarter of 2013, the number of loans increased 3% and value of these loans increased by 13%. This is the highest quarterly volume in London since the fourth quarter 2007, and the highest amount borrowed since the third quarter of 2007.
Lending to first-time buyers
First-time buyers took out more loans and borrowed more in total than in any quarter since 2007 totalling 13,300 loans and £3.3bn. The affordability levels slightly improved with first-time buyers typically borrowed 3.86 times their gross income, less than the 3.90 in the previous quarter but above the UK average of 3.41.
The typical loan size for first-time buyers was £221,997 in the third quarter, up from £212,500 in the previous quarter. The typical gross income of a first-time buyer household was £58,000 compared to £55,255 in the second quarter.
First-time buyers in London have tended to put down larger deposits than in the UK – typically putting down a deposit worth 24% of the property value compared to the UK average of 17%. In the third quarter, first-time buyers paid 21% of gross monthly income towards capital and interest payments, a minor change from the second quarter when it was 21.1%.