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

Lending in the third quarter 2015:

  • First-time buyer loans totalled 12,800 in London – up 17% on the previous quarter but down 1% on the third quarter in 2014. First-time buyers borrowed £3.4 billion – up 24% on the previous quarter and 4% on the same quarter in 2014.
  • There were 10,800 home-mover loans in London, up 32% on the previous quarter and 5% on the third quarter of 2014. Total value of these loans was £4bn, up 38% on the second quarter and 11% on the third quarter 2013.
  • Remortgage lending increased 8% by volume and 10% by value compared to quarter two. Compared to the third quarter last year, it was up 15% by volume and 25% by value.

Paul Smee, director general of the CML, commented:

In London, as in the UK, the market has continued growth the past two quarters in both house purchase and remortgage activity. The number of people buying their home in London is at levels not seen since 2007, but this is still only 60% of the numbers seen at the height of the market. Borrowers appear to be taking advantage of relatively favourable economic conditions and this could mean a continual upward trajectory moving into the new year.

 Loans for home-owner house purchase and for remortgage by value


Lending for house purchase and remortgage

House purchase lending in London saw a quarter-on-quarter and year-on-year rise, in both the number of loans and the amount borrowed, compared to the second quarter of 2015. This was the highest number of loans and most amount borrowed in a quarter in London since 2007. House purchase lending this quarter was driven mostly by first-time buyers, who made up 54% 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. This quarter had the highest number of remortgage loans since the first quarter of 2009, and the most amount borrowed for remortgage overall since the last quarter of 2008.

Lending to first-time buyers

First-time buyers in London typically borrowed 3.85 times their gross household income, up from 3.82 the previous quarter and more than the UK average of 3.44.

The typical loan size for first-time buyers was £238,293 in the third quarter, up 6% on the second quarter and 7% on the same quarter last year. The typical gross income of a first-time buyer household was £61,001, up 4% compared to the second quarter and 5% up on the third quarter of 2014.

First-time buyers’ payment burden in the second quarter was 19.2% of gross income to cover capital and interest payments, down on the second quarter’s 19.5% but higher than the 18.4% UK average.

Lending to home movers

Home movers in London typically borrowed 3.79 times their gross household income, up from 3.76 the previous quarter and higher than the UK average of 3.14.

The typical loan size for home movers was £318,503, which was up 6% on the previous quarter and 10% on the same period last year. The typical gross income of a home movers’ household was £86,727, up 4% on the second quarter and 4% on the third quarter 2014.

Home movers’ payment burden in the third quarter saw them spend 19.3% of their gross household income to cover capital and interest payments, unchanged from the previous quarter but less than 20.9% in the same quarter in 2014.