FTB mortgages highest for nearly three years in Q3

Robyn Hall

November 26, 2012

At 50% London has the lowest level of homeownership in the UK but its sheer size means that it still accounted for 28% of the value of all first-time buyer lending in the UK over the last year.

Paul Smee, director general of CML, said: “The London housing market faces similar issues to the rest of the UK in terms of a lack of supply and affordability yet different demographics, population flows and tenure patterns mean that it is also unique.”

First-time buyers in London put down larger deposits than in other parts of the UK despite higher house prices and tougher affordability criteria and purchased properties with an average loan to value of 75%, a figure unchanged since the third quarter of 2008 and less than in the rest of the UK at 80%.

Jonathan Harris, director of mortgage broker Anderson Harris, said: “The deposit is the biggest barrier to home ownership for many would-be first-time buyers in London so it is hoped that the Funding for Lending scheme will have a positive impact enabling lenders to offer cheaper rates to those with modest deposits.”

In a separate report, Housing in London: challenges and solutions, published alongside the quarter three statistics CML found the characteristics of London’s first-time buyers differed from the UK average in several key areas.

First-time buyers are older in London at average age of 31 compared to the rest of the UK which is 29 with more time to build savings and achieve higher paying employment.

Independent buying agent Gabby Adler said: “Many clients realise the challenge they face in taking the first step on the property ladder and choose to wait to save a substantial deposit before buying. I deal a lot with first-time buyers that are in their mid-thirties who are making a family home their first purchase and one that they will stay in for the next 10 years if not more.

“Savvy buyers know that the cost of moving is so high waiting to buy will avoid the costs of selling a small flat for a bigger house.”

Parental assistance in London is greater with 28% of first-time buyers estimated to have bought unassisted in London bought compared to 34% in the UK overall.

However their incomes are higher earning an income of £50,000 compared to £34,000 in the UK overall.

Harris added: “Clearly London is a special case because homes are much more expensive than the rest of the country and the vast majority of first-time buyers we deal with have financial assistance from parents or grandparents. Lenders could do more to help people buying in the capital appreciating that it is much more difficult.”

However their incomes are higher earning an income of £50,000 compared to £34,000 in the UK overall.

First-time buyers in London make up a larger proportion of the total mortgage market, around 50% compared to around 40% in the UK overall, reflecting demographics in London where there tends to be more young people of a typical first-time buyer age.

Loans for house purchase in London increased in the third quarter as in the rest of the UK. A total of 20,600 house purchase loans (worth £5,070 million) were advanced in London up by 22% compared to the second quarter and a 4% increase compared to the same period last year.

This rate of growth compared favourably to the UK overall where house purchase lending increased by 13% on the second quarter. The total value of loans for house purchase (5,050 million) marked the highest figure since the last quarter of 2007.

Smee added: “With the Mayor now directly responsible for housing strategy and investment in London we look forward to seeing his finalised London housing strategy. Lenders want to be recognised as part of the solution and we will work constructively with the government and the Greater London Authority on deliverable solutions to London’s housing challenges.”

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