According to the latest lending figures from The Council of Mortgage Lenders (CML), home buyers in London borrowed £5.9bn for house purchase, down 5% quarter-on-quarter and 13% year-on-year. They took out 18,500 loans, down 3% compared to the previous quarter and 15% on the fourth quarter 2015.

First-time buyers borrowed £3bn, down 3% on the third quarter and 4% on the fourth quarter last year. This equated to 11,000 loans, down 2% quarter-on-quarter and 7% year-on-year.

Home movers borrowed £2.8bn, down 8% quarter-on-quarter and 21% compared to a year ago. This equated to 7,400 loans, down 6% quarter-on-quarter and down 24% compared to the same quarter in 2015.

Remortgage activity totalled £3.9bn, down 13% on the third quarter but unchanged compared to the same quarter last year. This came to 13,400 loans, down 8% quarter-on-quarter but up 2% compared to a year ago.
In 2016:

In 2016, home buyers in London borrowed £24.5bn for house purchase, down 0.4% on 2015. They took out 75,800 loans, down 7% compared to the year before.

First-time buyers borrowed £11.9bn, up 3% on the previous year. This totalled 43,300 loans, down 5% on 2015.Home movers borrowed £12.5 billion, totalling 32,400 loans, down 3% by value and 10% by volume on 2015.Remortgage activity totalled £16.5bn, up 21% on 2015. This came to 55,500 loans, up 13% in 2015.

“The number of home buyers in London fell to a four year low in 2016. Home mover activity in particular continues a downward trend, with the fewest loans since 1991. Persisting supply and affordability issues appear to be exerting an ongoing restraint on growth, meaning there is some uncertainty around how the market will perform going into 2017.” said Paul Smee, CML director general.

“By contrast, remortgage activity appears to be experiencing a resurgence. Competitive mortgage rates aided by low interest rates have sparked remortgage levels not seen in the Capital since 2008.” he added.

Affordability in London

First-time buyers typically borrowed £254,000 (£135,000 in the UK overall), down from £260,000. The average household income was £63,700 (£40,200 in the UK overall), down from £64,700. The typical income multiple in London of 4.02 (unchanged from the previous quarter) also compared to the UK average of 3.56.

Affordability metrics for home movers saw the typical amount borrowed this quarter was £335,400 (£172,500 in the UK overall), down from £336,800 the previous quarter. The average household income of a home mover was £87,300 (£54,900 in the UK overall), down from £87,600. This meant the typical home mover income multiple in London was 3.97, unchanged from the previous quarter but higher than the UK average of 3.29.

Source: CML