Home MoverFeb 22 2017

Fewest Londoners moving house since 1991

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Fewest Londoners moving house since 1991

London continues to buck the trend of mortgage lending growth as first-time buyer activity helps to paint a healthier picture in other parts of the UK.

The latest quarterly figures from the Council of Mortgage Lenders (CML) revealed homebuyers in the capital borrowed £5.9bn for house purchase in the last three months of 2016, as the number of people looking to buy a property in the capital fell to a four-year low.

The figure was down 5 per cent quarter-on-quarter and 13 per cent year-on-year, while the total number of loans - 18,500 - fell 3 per cent compared with the previous quarter and 15 per cent on the fourth quarter of 2015.

First-time buyer activity also declined, with borrowing falling to £3bn, down 3 per cent on the third quarter and 4 per cent on the fourth quarter last year.

Home movers borrowed £2.8bn, down 8 per cent quarter-on-quarter and 21 per cent compared to a year ago, while remortgage activity totalled £3.9bn, down 13 per cent on the third quarter but up 21 per cent year-on-year for 2016 as a whole.

CML director general Paul Smee said: “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. 

“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.”

But outside the capital, where problems of supply and affordability are less acute, the figures were more positive.

In Wales, home buyers borrowed £1.1bn for house purchase in the fourth quarter, up 5 per cent quarter-on-quarter and year-on-year. 

A surge in first-time buyer activity helped to boost the figures as they borrowed £480m in total, up 7 per cent on the third quarter and 14 per cent on the fourth quarter last year.

Northern Ireland also witnessed an increase in borrowing, with £410m being taken out for house purchase - up 2 per cent quarter-on-quarter and 5 per cent year-on-year. 

First-time buyers borrowed £220m, up 5 per cent on the third quarter and 16 per cent on the fourth quarter last year, while the number of loans rose to 2,200, up 5 per cent quarter-on-quarter and year-on-year. 

Lending in Scotland was more subdued, however, with homebuyers borrowing £2.2bn for house purchase, down 0.5 per cent quarter-on-quarter and 3 per cent year-on-year.  

While first-time buyer activity dropped 3 per cent on the third quarter, to £910m, it grew by 5 per cent on the fourth quarter of last year.

Mark Harris, chief executive of mortgage broker SPF Private Clients, says: "Remortgaging numbers are exceptionally strong, a result of just how cheap mortgage rates have become rather than any real concern that interest rates are going to start rising anytime soon. 

"However, there is uncertainty with regard to Brexit and what that means for our economy, so we are finding borrowers keen to get some security in their own lives, usually by fixing their mortgage payments."

simon.allin@ft.com