Home buyers in London borrowing higher amounts, latest CML data shows

Taylor Scott International News

More mortgages were completed and a higher amount borrowed in Greater London in the third quarter of this year than in any quarter since 2007, according to the latest data from the Council of Mortgage lenders. House purchase lending to home buyers increased 12% quarter on quarter in London totalling £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. First time buyers took out more loans and borrowed more in total than in any quarter since 2007 totalling 13,300 loans and £3.3 billion. 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%. Due to higher house prices within London compared to the UK overall, there was a continued shift in the mix of properties bought by first time buyers in London towards more expensive properties. In the third quarter, 66% of first time buyers bought properties priced at more than £250,000, up from 63% in the second quarter and 54% in the same period last year. This was significantly higher than the UK overall level of 20%. In the third quarter of 2014, lending to home movers saw larger growth quarter on quarter compared to first time buyer lending, but a slight decline in lending volumes when looking at year on year comparisons. Home movers did however borrow more this quarter than any other quarter since 2007 totalling £3.7 billion. Home mover affordability changed fractionally, with home movers typically borrowing 3.69 times their gross income compared to 3.66 in the second quarter and the 3.05 in the UK overall. The typical loan size for home movers was £290,000 in third quarter, up from £281,000 in the previous quarter. The typical gross household income of a home mover was £83,596 in third quarter compared to £82,614 in second quarter. Home movers in Greater London spent 20.8% of their gross income to cover monthly capital and interest payments, slightly changed from 20.6% in the second quarter and less than the 18.8% UK average. The number of loans advanced for… Continue reading →

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