Blogs, Press & Media

London property market avoids usual seasonal lending dip

Thu 26 May 2016

The usual seasonal dip in home lending in the first quarter of the year didn't seem to happen in London as the
latest data shows borrowing up quarter on quarter and year on year. The data from the Council of Mortgage
Lenders shows that home buyers in London borrowed 7.1 billion in the first three months of 2016, up 6% quarter
on quarter and 41% on a year ago. They took out 21,400 loans, down 2% on the previous quarter but up 20%
compared to the first quarter 2015.First time buyers borrowed 2.9 billion, down 7% on the fourth quarter 2015
but up 19% on the first quarter last year. This equated 10,700 loans, down 10% quarter on quarter but up 3% year
on year.Home movers borrowed 4.2 billion, up 18% quarter on quarter and 63% compared to a year ago. This
equated to 10,600 loans, up 8% quarter on quarter and 43% compared to the first quarter of 2015.Remortgage
activity totalled 4 billion, up 4% on the fourth quarter 2015 and 36% compared to a year ago. This came to
13,500 loans, up 2% quarter on quarter and 21% compared to a year ago.The usual seasonal dip in lending in
the first quarter of the year didn't seem to impact London as strongly as the UK overall, mainly due to a strong
uptick in home mover activity. Remortgage lending also performed well resulting in the highest first quarter
remortgage levels in the capital since 2009,' said Paul Smee, director general of the CML.The housing market in
Greater London has some unique characteristics compared to the rest of the UK such as more first time buyers,
but lower overall levels of home ownership,' he pointed out.Affordability and the supply of housing remain critical
factors for the London market, and we will be pleased to work with the new mayor and his deputy on how to
deliver appropriate strategy over his term of office,' he added.The data also shows that quarter on quarter
affordability metrics for first time buyers show that the amount borrowed increased to 248,047 compared to the
UK average of 130,500, from 243,746, but this was offset by a rise in the total household income of borrowers
to 62,508 compared to the UK average of 40,000, from 61,155 meaning the median income multiple
remained virtually unchanged from 3.94 to 3.93.London home movers saw a similar trend to 338,500 to the UK
average of 172,295, from 315,995 the previous quarter, and household income increased to 91,862 on
average compared to 56,104 UK-wide, from 84,313 meaning the income multiple decreased slightly from 3.87
to 3.83.The proportion of monthly gross income home buyers are spending on capital and interest repayments
was 19.0%, which was the lowest level since the CML began tracking this metric in 2005.The number of
remortgage loans was the highest first quarter figure since 2009, and the highest value of remortgage lending in
London in the first quarter since 2008.David Brown, chief executive officer of Marsh & Parsons, believes that it is
encouraging to see home movers at the forefront of borrowing at a time when the supply of new housing is low.It
is vital that existing home owners are taking opportunities to sell up and move up the property ladder, freeing up
properties at the lower end of the market. It's also a great vote of confidence in London,' he explained.People sell
their homes when they recognise strong house price growth and the favourable returns to be made, plus the
belief that they'll be able to find a buyer easily. In London, all these elements are firmly in place,' he pointed
out.He revealed that the firm saw buyer demand increase 9% year on year in the first three months of 2016 with
an average of 14 buyers competing for every available property on the market.It's important in the long term that
first time buyers in London remain similarly assured of the affordability and possibility of climbing onto the ladder,'
he added.

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