People taking their first step in home-ownership in Greater London borrowed 27 per cent more in the second quarter of 2014 than the did in the same period a year ago.
First-time buyers in London borrowed £3bn from April to June this year, according to data released by CML.
The statistics show that FTBs in the UK capital typically borrowed 3.90 times their gross income, more than the 3.83 in the previous quarter and higher than the UK average of 3.46.
The proportion of FTBs purchasing properties priced at more than £250,000 increased from 57 per cent in the first quarter to 63 per cent in the second. This compares to a second quarter of 2013 figure of just 51 per cent, and far exceeds the UK average of 17 per cent.
Paul Smee, director general, CML, said: “It is good to see continuing strong demand from first-time buyers, but it is a concern that trends in affordability seem to be tightening. This is especially challenging in London.”
Home-mover loans totalled 9,000 in Q2 2014, increasing the total value of loans by 26 per cent since the second quarter of 2013. Remortgages in the second quarter also showed growth compared to the previous quarter and the same quarter in 2013.
David Hollingworth, associate director, London & Country Mortgages, said: “It is concerning that buyers have to borrow more. However, lending criteria introduced by the FCA’s Mortgage Market Review should limit the extent of loans. There is also the possibility that house prices in London will soon flatten slightly.”
