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London first-time buyer numbers up 15% in 2012

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The number of first-time buyers in the Capital rose by 15% last year, with 37,300 swinging onto the first rung of the ladder, according to Council of Mortgage Lender (CML) data.

This is roughly half the 60,000 loans lent in 2007 and up from 32,400 in 2011. However, it was the biggest quarterly spike since Q4 before the Stamp Duty holiday deadline.

On average around the UK, 40% of FTBs typically bought properties for less than £125,000, where just 4% did so in London. The London market continues to stand apart with a further 8% of first-time buyers purchasing properties for over £500,000 against 2% in the rest of the UK.

However, FTB affordability remains tight in London, with average income multiples at 3.59 times income in the capital, against 3.26 elsewhere.
Over the quarter, in the rest of the market home mover lending fell and remortgaging activity stayed stable.

In the fourth quarter, £2.02bn was advanced for remortgaging, unchanged from the third quarter but still 10% lower than in the same quarter of 2011.

As in the UK overall, remortgage lending in London was subdued in 2012. A total of £8.4bn was advanced to borrowers remortgaging, a 3% fall compared to 2011, a smaller fall than was seen in the UK as a whole.

In the fourth quarter, £2.02bn was advanced for remortgaging, unchanged from the third quarter but still 10% lower than in the same quarter of 2011.

The average loan to value ratio remained at 75% in the fourth quarter and 2012 overall, compared to 80% across the rest of the UK.

CML director general Paul Smee said: “These figures show that first-time buyers in London are regaining their confidence and returning to the market. Even though property in London remains more expensive than in the rest of the UK, low interest rates and the increased availability of high loan-to-value mortgages for borrowers with smaller deposits has enabled more aspirational homeowners to enter the market than any time in the last five years.”

Meanwhile in Scotland, new buyers rose to their highest level in four years with 19,000 in 2012, up 13% on the previous year. In Northern Ireland, the outlook also improved with 5,100 first-time buyers entering the market in 2012, up from 4,700 in 2011, an increase of 9%.

On a quarterly basis, lending to NI home movers fell in the fourth quarter compared to the previous quarter while remortgage lending picked up slightly.

Ben Thompson, MD, Legal & General Mortgage Club said: “The regional picture is positive across the UK. We have seen strong figures posted in Northern Ireland, Wales and Scotland, however London is still very much leading the recovery.”

“Our study in conjunction with the Cebr ‘A New Normal in the Housing Market’ showed homeowners in Brighton (62%) and Bristol (67%) are the most optimistic about securing a fair price for their home if they sell now. However, this optimism is not shared in Nottingham (35%) and Belfast (33%) illustrating the divergence in attitudes and experiences across the country at the moment.”

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