Home lending in London down in first quarter of 2017, but remortgaging up
Lending to home buyers in London was down 19% in the first quarter of 2017 compared to the same period a year ago, the second quarterly fall in a row, the latest figures show.
Overall buyers borrowed £5.4 billion, down 3% quarter on quarter and down 22% year on year, taking out 16,700 loans, a fall of 5% compared to the previous quarter and 19% on the first quarter of 2016.
The data from the Council of Mortgage Lenders shows that lending to first time buyers also fell but remortgage activity was up to an eight year high although the actual number of loans was down.
First time buyers borrowed £2.8 billion, down 5% on the fourth quarter and 3% on the first quarter of last year. This equated to 10,000 loans, down 5% quarter on quarter and down 3% year on year.
Home movers borrowed £2.7 billion, unchanged quarter on quarter and down 35% compared to a year ago. This equated to 6,800 loans, down 3% quarter on quarter and down 33% compared to the same quarter in 2016.
Remortgage activity totalled £4.2 billion, up 13% on the fourth quarter and 7% compared to the same quarter last year. This came to 16,700 loans, down 5% quarter on quarter and 19% compared to a year ago.
‘Home buyer activity in London has fallen for the second quarter in a row. A traditional seasonal dip in activity in the winter months is expected, but it has been more pronounced in London compared to the UK overall,’ said Paul Smee, CML director general.
He explained that in London persisting supply and affordability issues continue exerting ongoing restraint on growth but the CML expects that activity will pick up going into the summer months.
‘By contrast, remortgage activity was at an eight year high in London. Attractive mortgage deals aided by low interest rates appear to have sparked a resurgence in activity that has seen consecutive growth year on year every quarter for three year,’ he added.
In London first time buyers typically borrowed £254,300 compared to £133,000 in the UK overall, down from £256,000. The average household income was £64,100 compared to £40,000 in the UK overall, unchanged from the previous quarter.
Affordability metrics for home movers meant that the typical amount borrowed in the first quarter was £345,300 compared to £175,000 in the UK overall, up from £340,000 the previous quarter.
The average household income of a home mover was £89,300 compared to £54,600 in the UK overall, up from £88,600. This meant the typical home mover income multiple in London was 3.97, up from 3.96 the previous quarter and higher than the UK average of 3.34.