The second quarter of 2013 saw first-time buyers in London reach the greatest number recorded since the end of 2007. Figures from the Council of Mortgage Lenders (CML) showed those new to the property ladder accounted for 11,2000 purchases in the capital during Q2. While this trend hasn't been replicated across the UK, its certainly positive for London, which is notorious for being a difficult city for first-time buyers.
In the capital, 56 per cent of house purchase loans were to first-time buyers, compared to 46 per cent in the UK overall. Quarter-on-quarter, the number of loans advanced to property novices grew by 19 per cent. Year-on-year, a remarkable 38 per cent jump was noted. Loan size has also increased - a fact CML claims is the result of strong house price growth. Typical amounts increased by 6.9 per cent in Q2 in London, compared to 2.9 per cent for the UK as a whole.
This has caused the value of lending to first-time buyers to increase 33 per cent over the quarter to GBP 2.490 million. Over the year this represents 47 per cent growth. Despite rising house prices, the affordability of loans is not changing, as incomes increase and interest rates fall. In the capital, the average first-time buyer spends 20.8 per cent of their income on mortgage payments, which is almost unchanged from the 21 per cent recorded in Q1 2013.
Yet affordability of property remains an issue in London, despite increased availability of lending. First-time buyers borrow an average of 3.67 times their income compared to 3.30 for the UK overall.
CML director general Paul Smee said: "Mortgage lending in London has followed a similar pattern to the rest of the UK with strong house purchase activity this quarter, strengthened particularly by first-time buyer activity. Total lending for house purchase has also increased this quarter upon last and from a year ago which suggests increasing confidence that economic conditions are becoming more favourable."
- Friday 30 August 2013