A total of 9,400 loans were advanced to first-time buyers in the first quarter in London, unchanged from the same quarter last year, data from the Council of Mortgage Lenders have revealed.
The CML said this was a more positive result than the figures suggest due to the boost in first-time buyer activity in the first quarter last year as a result of the end of the stamp duty holiday in March.
However, first time buyer affordability in London remained tighter than in the UK overall. First-time buyers borrowed an average of 3.58 times their income in the first quarter and their mortgage payments, on average, consumed 21 per cent of their income.
This was a marginal improvement compared to the fourth quarter of 2012 and is likely to due to the continuing downward trend in mortgage interest rates, however affordability remained less favourable than in the UK overall where the average income multiple was 3.23 in the first quarter and on average 19.5 per cent of first-time buyer income was taken by mortgage payments.
The average loan-to-value ratio for first-time buyers remained at 75 per cent in London in the first quarter, below the 80 per cent seen in the UK overall.
First-time buyers in London continued to make up a larger proportion of house purchase loans in the first quarter than in the UK overall. Around 54 per cent of house purchase loans advanced in the first quarter in London were to first-time buyers compared to 44 per cent in the UK overall.
As in the UK, lending to home movers in London dipped in the first quarter. A total of 8,000 loans, worth £2.3bn, were advanced to home movers in London, an 18 per cent fall compared to the fourth quarter of last year, and down by 5 per cent compared to the first quarter of 2012.
Remortgage lending in London as well as the rest of the UK remained subdued. A total of £1.8bn was advanced to borrowers remortgaging in the first three months of 2013, an 18 per cent drop compared to the first quarter of last year, similar to the fall seen in the UK as a whole, where remortgage lending dropped by 19 per cent compared to the first quarter of last year.
Paul Smee, CML director general, said: “These figures show that higher house prices and tougher affordability constraints in London have not had a significant impact on consumer appetite to buy or move home in the capital. A similar percentage of those who live in London want to be home-owners despite differences in demographics and population flows.
“Lending activity in London was largely similar to the same period last year, a positive picture bearing in mind the significant boost to the market caused by the end of the stamp duty holiday in March last year.”
