Lending in London grew strongly in third quarter
In the third quarter of 2017 in London:
- Home buyers borrowed £6.74 billion for house purchase, up 10 per cent quarter-on-quarter and 13 per cent year-on-year. They took out 19,600 loans, up nine per cent compared to the previous quarter and six per cent on the third quarter of 2016.
- First-time buyers borrowed £3.31 billion, up seven per cent on the second quarter and nine per cent on the third quarter of last year. This equated to 11,200 loans, up six per cent quarter-on-quarter and three per cent year-on-year.
- Home movers borrowed £3.44 billion, up 14 per cent quarter-on-quarter and 17 per cent compared to a year ago. This equated to 8,400 loans, up 14 per cent quarter-on-quarter and 11 per cent compared to the same quarter in 2016.
- Remortgaging activity totalled £4.49 billion, up 15 per cent on the second quarter and four per cent compared to the same quarter last year. This came to 14,500 loans, up 12 per cent quarter-on-quarter and three per cent compared to a year ago.
Commenting on the data, UK Finance’s head of mortgage policy June Deasy said:
“Affordability remains challenging in London, but borrowing by first-time buyers grew strongly in the third quarter and reached its highest level for a decade. Borrowing by home movers grew even more strongly, but remained below its recent peak in the first quarter of 2016, when activity was boosted by the impending increase in stamp duty. Remortgaging was also robust as London borrowers sought to lock into historically low borrowing rates ahead of the widely anticipated increase in base rate.”
Affordability in London
First-time buyers typically borrowed £275,000 (£139,500 in the UK overall), up from £268,747 in the previous quarter. The average household income was £67,737 (£41,009 in the UK overall), up from £66,961 three months earlier. The typical income multiple in London of 4.06 (up from 4.02 in the previous quarter) was higher than the UK average of 3.61.
The average home mover borrowed £353,995 in the third quarter (£180,995 in the UK overall), up from £353,499 in the preceding three months. The average household income of a home mover was £91,940 (£55,865 in the UK overall), up from £91,329. This meant that the typical home owner income multiple in London was 4.01, the same as in the preceding quarter and higher than the UK average of 3.39.
Chart 1: Number of loans to home-owners, 2007-2017
Table 1: Number of loans for house purchase and remortgaging in the third quarter
| House purchase | Remortgage | ||
| FTBs | Movers | ||
| Q3 2016 |
10,900 |
7,600 |
14,100 |
| Q2 2017 |
10,600 |
7,400 |
12,900 |
| Q3 2017 |
11,200 |
8,400 |
14,500 |
| Change compared to Q2 2017 |
5.7% |
13.5% |
12.4% |
| Change compared to Q3 2016 |
2.8% |
10.5% |
2.8% |
Table 2: Value of loans for house purchase and remortgaging in the third quarter
| House purchase (£m) | Remortgage (£m) | ||
| FTBs | Movers | ||
| Q3 2016 |
3,040 |
2,950 |
4,320 |
| Q2 2017 |
3,090 |
3,020 |
3,920 |
| Q3 2017 |
3,310 |
3,440 |
4,490 |
| Change compared to Q2 2017 |
7.1% |
13.9% |
14.5% |
| Change compared to Q3 2016 |
8.9% |
16.6% |
3.9% |
Affordability infographic
Kindly shared by CML
