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First-time buyers in London up 33% year-on-year in the fourth quarter of 2013

26 Feb 14

First-time buyers in London up 33% year-on-year in the fourth quarter of 2013

Mortgage lending in London in the fourth quarter of 2013 followed a similar upward trend to the rest of the UK, new data from the CML shows. London saw strong levels of lending for home-owner house purchase, in particular to first-time buyers. 

First time buyers

In the fourth quarter of 2013, 13,400 loans were advanced to first-time buyers in London, an increase of 6% on the previous quarter and a rise of 33% compared to the fourth quarter of 2012.

Strong house price growth in London, and the knock on effect on the typical loan amount, has resulted in growth in the value of lending to first-time buyers. In total, £3bn was advanced in the fourth quarter of 2013, up 3% compared to quarter three and up 49% compared to the same period last year.

First-time buyers make up a larger proportion of house purchase loans in London than in the UK overall – 56% of house purchase loans advanced in London in quarter four were to first-time buyers compared to 45% in the UK overall. This is a trend that has consistently been observed historically and is likely to be a result of demographics in London, with proportionately more younger people.

Affordability in London  

In the fourth quarter, first-time buyers typically borrowed £198,900, an increase compared to the fourth quarter in 2012 when it was £196,000. On average first-time buyers who bought in this period spent 20.6% of their income on mortgage payments, down marginally from quarter three when it was 20.8% and less than the 21.3% in the same period in 2012.

First-time buyer affordability in London remains tighter than in the UK overall. First-time buyers in London borrowed an average of 3.79 times their income in the fourth quarter compared to 3.74 in the third quarter and 3.60 times their income in the fourth quarter of 2012.

There was a shift in the mix of properties bought by first-time buyers in London in the period. In quarter four, 54% of first-time buyers bought properties priced at more than £250k, up from 47% in the same period last year. In London only 2% of first-time buyers bought a property for less than £125k, compared to 33% for the UK overall, and therefore did not have to pay any stamp duty. At the other end of the scale 10% in London bought properties valued at more than £500k.

First-time buyers in London in 2013

In 2013 overall, first-time buyers in London were advanced a total of 45,800 loans, up 24% compared to 2012. The total value of these loans was £10.1bn, up 34% compared to 2012.

Chart 1: Lending to FTBs in London, number of loans advanced, and lending to FTBs in London as a proportion of the UK total (1 year moving average)

26.02.2014 London FTB graph

Source: CML regulated mortgage survey

Home movers

The total number of loans advanced to home movers in London was 10,400 in the fourth quarter of 2013. This was a decrease of 3% compared to quarter three but up 8% year-on-year. The total value of these loans was £3.2bn in the fourth quarter of 2013, which was down 4% compared to the third quarter but 21% up on the fourth quarter of 2012.

The total number of loans advanced to home movers in London overall in 2013 was 37,400, up 1% compared to 2012. The total value of these loans was £11.2bn, an increase of 9% compared to 2012.

Lending for house purchase

Total house purchase lending in London showed an increase of 2% in the fourth quarter compared to the third quarter and was up by 21% compared to the fourth quarter of 2012.

There were 23,800 house purchase loans advanced in London worth £6.2bn in total, down slightly by 1% in value compared to the third quarter of 2013 but up by 33% compared to the fourth quarter in 2012.

Overall in London for 2013, the total number of loans advanced for house purchase was 83,200, up 12% compared to 2012. The total value of the loans was £21.3bn which was up 19% compared to 2012.

Chart 2: House Purchase lending in London: Year-on-year % change in London compared with the UK 

26.02.2014 London house purchase graph

Source: CML regulated mortgage survey

Remortgage lending

The total number of loans advanced in London for remortgage in the fourth quarter of 2013 was 11,200. This was a decrease in volume of 4% compared to the third quarter, but up 19% compared to the fourth quarter of 2012. There was £2.8bn advanced to borrowers remortgaging their houses in the fourth quarter of 2013, which was down by 1% compared to the third quarter but an increase of 36% compared to the fourth quarter of 2012.

Chart 3: Remortgage lending in London: Year-on-year % change in London compared with the UK

26.02.2014 London remortgage graph

Source: CML regulated mortgage survey

Commenting on the data, CML chief economist Bob Pannell said:

"The London housing market has particular challenges but lending experienced similar rates of growth to the rest of the UK during the fourth quarter. First-time buyers have continued the strong upward trend in lending we have seen throughout 2013 and, despite much debate in political spheres about their affordability plight in the capital, an increasing number are realizing their aspirations to become home-owners."

Notes to editors

1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 95% of all residential mortgage lending in the UK. There are 11.3 million mortgages in the UK, with loans worth over £1.2 trillion.

2. Source: CML Regulated Mortgage Survey

3. The Council of Mortgage Lenders does not publish statistics for mortgage approvals. The data in our monthly Regulated Mortgage Survey and gross lending press releases relate to mortgage advances only. A mortgage approval is the firm offer to a customer of a specific amount of credit secured against a particular property. A mortgage advance is the total amount of loan actually provided to the buyer, by the lender. Please see the mortgage statistics timeline on our website for further information.

4. Data for the first quarter of 2014 will be released on Wednesday 28 May 2014

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