Fewer first time buyers in London took out mortgages compared with a year ago which could be a sign that rising house prices and lack of affordable homes to buy is affecting their ability to get on the housing ladder.
First time buyers borrowed £3.1 billion in the third quarter of 2016, up 7% on the second quarter but down 5% compared to the third quarter last year, according to the latest figures from the Council of Mortgage Lenders. This equated to 11,300 loans, up 7% quarter on quarter but down 9% year on year.
The data also shows that home movers borrowed £3.1 billion, up 25% on the second quarter of this year but 22% compared to a year ago. This equated to 7,900 loans, up 20% quarter on quarter but down 25% on the third quarter of 2015.
Remortgage activity totalled £4.4 billion, up 5% on the second quarter and 24% compared to the same quarter a year ago. This came to 14,500 loans, up 3% quarter on quarter and 15% compared to the third quarter 2015.
Overall home buyers in London took out 19,200 loans worth £6.2 billion, a 12% rise compared to the second quarter but down 16% compared to the same quarter in 2015. The value of these loans was up 15% compared to the previous quarter but down 14% compared to the third quarter of 2015.
‘There have been quarter on quarter increases in the number of loans for house purchase and remortgage but the number of first time buyers and home movers has decreased when compared to the same period in 2015,’ said Paul Smee, director general of the CML.
‘This is the first quarterly data after the European Union referendum but it is unlikely to be very reliable as an early indicator of how the market in London will be affected. It does not appear that there will be drastic change in activity for the foreseeable future in a London market which has been stable for several years,’ he added.
The CML data also shows that quarter on quarter affordability metrics for first time buyers remained relatively unchanged with the typical amount borrowed at £260,000 compared to the UK average of £134,900.
The total household income of borrowers in London was £64,700 compared to the UK average of £40,500 and overall, the median income multiple increased from 3.98 to 4.02 compared to the UK average of 3.54.
London home movers saw the average median advance increase from £324,300 to £336,300 compared to the UK average of £172,800 and household income decreased to £87,500 from £84,800, with the typical income multiple decreasing slightly from 3.98 to 3.97.
