December 6 2013 Latest news:
Wednesday, August 28, 2013
Loans to first-time buyers in London are at their highest level since 2007, say the Council for Mortgage Lenders (CML).
Figures from the second quarter of this year show people making their first step onto the housing ladder in the capital make up a larger proportion of purchases compared to the UK overall.
First-time buyers accounted for 11,200 loans for house purchase in London between April and June, 56 per cent of the total lent to house buyers.
The figure across Britain for the same period was just 46 per cent, showing the market in London is recovering faster than elsewhere in the country.
The CML figures for first-time purchasers are the largest quarterly number since the end of 2007, an increase of 19 per cent on the first quarter of 2013, and a rise of 38 per cent compared to the same three months last year.
The typical loan amounts have also increased, a knock-on effect of strong house price growth in the capital, resulting in a larger growth in the value of lending to first-time buyers.
A total of almost £2.5billion was advanced to these borrowers in the second quarter, an increase of a third on the start of the year and is 47 per cent more money loaned than the second quarter in 2012.
But the CML said this was not an indicator homes had become more affordable in London over the past year, as more mortgages had become available through rising wages rather than falling house prices.
First-time buyers in the capital also have to borrow an average of 3.67 times their income to get a mortgage, compared to 3.30 for the UK overall, despite the fact incomes of first-time buyers in London are higher than anywhere else, with an average wage of £52,100 a year for London house buyers compared to £35,400 in the UK overall.
A spokesman for the council said this may be why first-time buyers in London are generally putting down larger deposits than in the rest of the UK.
CML director general, Paul Smee, said: “Mortgage lending in London has followed a similar pattern to the rest of the UK with strong house purchase activity this quarter, strengthened particularly by first-time buyer activity.
“Total lending for house purchase has also increased this quarter upon last and from a year ago which suggests increasing confidence that economic conditions are becoming more favourable.”