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House purchase lending in London comes out of the seasonal dip but down on last year

Published: 26 August 2015

New CML data on the characteristics of lending in Greater London in the second quarter of 2015 outlining mortgage lending to first-time buyers, home movers and remortagors.

Lending in the second quarter 2015:

  • Home-owner house purchase activity in Greater London came out of the traditional seasonal dip to show growth in the second quarter by volume and value. But levels were still down compared to the same quarter last year. 
  • First-time buyer activity saw similar trends with an increase in levels on the first quarter of the year, but down on the same quarter last year. 
  • Home movers also had the same trend as first-time buyers in both volume and value. 
  • Unlike house purchase activity, remortgage lending had quarter-on-quarter and year-on-year growth in both volume and value. 

Paul Smee, director general of the CML, commented:

As in the UK overall, the London market came out of the usual seasonal dip in the first few months of the year and saw increased activity; but volumes are still down on the same period last year. Remortgage activity has shown quarterly and year-on-year growth after a period of stagnation. Borrowers appear to be taking advantage of competitive mortgage rates, ahead of a potential future interest rate rise.

Chart 1: Loans for home-owner house purchase and for remortgage by value

 London lending press release Q2 2015 - Chart 1

Source: CML Regulated Mortgage Survey (April 2005 onwards)

Download the data

Chart 2: Number of loans for house purchase and proportion of FTBs and home-movers

 London lending press release Q2 2015 - Chart 2

Source: CML Regulated Mortgage Survey (April 2005 onwards)

Download the data

Table 1: Second quarter lending for home-owner house purchase and remortgage

  Number of house purchase loans Value of house purchase loans, £m Number of remortgage loans Value of remortgage loans, £m
Second quarter 2015 18,800 5,510 11,600 3,240
Change compared to first quarter 2015 9.3% 12.7% 7.4% 13.3%
Change compared to second quarter 2014 -11.3% -9.7% 6.4% 12.1%

Source: CML Regulated Mortgage Survey (April 2005 onwards)


Lending for house purchase and remortgage  

House purchase lending in London saw a quarter-on-quarter rise, in both the number of loans and the amount borrowed, compared to the first quarter of 2015. Despite this, there were fewer borrowers in London than in the same period in each of the two preceding years.  

House purchase lending this quarter was driven mostly by first-time buyers, who made up 57% of all house purchase activity.   

Remortgage lending also saw a rise year-on-year and quarter-on-quarter in amount borrowed and in number of loans. 

Table 2: Second quarter first-time buyer lending and affordability measures

 

Number of loans

Value of loans £m

Loan size (£)

Income (£)

Loan-to-value

Loan-to-income

Interest payment as % of income

Capital and interest payment as % of   income

Second quarter 2015

10,700

2,670

224,994

58,685

75.1%

3.81

9.4%

19.4%

First quarter 2015

5.9%

11.7%

213,757

55,741

75.2%

3.83

10.6%

20.3%

Second quarter 2014

-11.6%

-10.4%

212,500

55,309

75.2%

3.90

11.5%

21.1%

Source: CML Regulated Mortgage Survey (April 2005 onwards)


Lending to first-time buyers

First-time buyers in London typically borrowed 3.81 times their gross household income, down from 3.83 the previous quarter but more than the UK average of 3.38.

The typical loan size for first-time buyers was £224,994 in the second quarter, up 5% on the first quarter and 6% on the same quarter last year. The typical gross income of a first-time buyer household was £58,685, up 5% compared to the first quarter and 6% up on the second quarter of 2014. 

First-time buyers' payment burden in the second quarter was 19.4% of gross income to cover capital and interest payments, down on the first quarter's 20.3% but higher than the 18.4% UK average.

Table 3: Second quarter home mover lending and affordability measures

 

Number of loans

Value of loans £m

Loan size (£)

Income (£)

Loan-to-value

Loan-to-income

Interest payment as % of income

Capital and interest payment as % of   income

Second quarter 2015

8,100

2,840

300,999

83,765

66.9%

3.75

8.1%

19.3%

First quarter 2015

 12.5%

 14.1%

293,500

82,187

68.5%

3.69

9.1%

20.1%

Second quarter 2014

 -10.0%

 -9.0%

281,000

82,683

69.5%

3.75

9.8%

20.6%

Source: CML Regulated Mortgage Survey (April 2005 onwards)


Lending to home movers

Home movers in London typically borrowed 3.75 times their gross household income, up from 3.69 the previous quarter and higher than the UK average of 3.08.

The typical loan size for home movers was £300,999, the first time average new loans have breached the £300,000 mark. The figure was up 3% on the previous quarter and substantially higher than the £160,994 UK average. The typical gross income of a home movers' household was £83,765, up 2% on the first quarter and 1% on the second quarter 2014. 

Home movers' payment burden in the second quarter saw them spend 19.3% of their gross household income to cover capital and interest payments, down from 20.1% in the first quarter but higher than the 18% UK average.

Chart 3: Number of home-owner remortgages

 20150826 London lending press release Q2 2015 - Chart 3

Source: CML Regulated Mortgage Survey (April 2005 onwards)

Download the data

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 11.1 million mortgages in the UK, with loans worth over £1.3 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 third quarter of 2015 will be released on Wednesday 25 November 2015.

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