New figures have revealed that the number of first time home buyers in London has reached its highest level in three years. Data from the Council of Mortgage Lenders shows that more people got onto the property ladder in the capital between July and September 2012 than at any time in the previous twelve quarters. A leading London mortgage advisor has called London a ‘first time home buyer hotspot’, citing the capital’s lower average loan to value as one of the reasons more people are buying in the area.
The Council of Mortgage Lenders (CML) figures show that more first time home buyers took out mortgages in London in the third quarter of 2012 than have done in any quarter for the last three years. FT Advisor reports that approximately 10,000 mortgages were sold to first time home buyers in London between July and September 2012.
“These figures are great news for the London housing market,” says Islay Robinson, director of London mortgage broker and large mortgage specialist Enness Private Clients. “The capital tends to have a lower average loan to value than other parts of the UK despite prices in London being, on average, higher.”
“This makes it easier for first time home buyers to get the mortgage finance they need to buy a property as there are more low loan to value deals available.”
The CML research revealed that while the average loan to value for the rest of the UK is 80 percent, Londoners had an average loan to value of 75 percent. It also found that despite having the lowest percentage in the UK of people who own their homes, London accounted for 28 percent of all first-time buyer lending in the UK over the last year.
As well as borrowing lower loan to values, London first time home buyers also tend to be older, with an average age of 31 compared to 29 in the rest of the UK. First time buyers in the capital are also more likely to receive financial aid from their parents and they also benefit from higher incomes, with an average household income of £50,000 compared to £34,000 in the UK overall.
Paul Smee, director general of the 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 it is also unique.
“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.”
Mr Robinson, the London mortgage advisor, added: “With higher house prices, you would perhaps think that it would be harder to get onto the property ladder in London than elsewhere. However, higher incomes, older buyers and more financial aid from relatives actually make London something of a first time home buyer hotspot.”