Mortgage lending in London picking up after election
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The number of mortgages advanced to Londoners buying a home decreased in the first quarter of the year according to a report, but there are signs that they have risen again within a month of the election.
The figures from the Council of Mortgage Lenders (CML) show a decline in both the number of loans offered and the overall value of house purchase lending in Greater London in the first three months of 2015 compared to the previous quarter.
First time buyers borrowed £2.4billion across 10,100 loans, a decrease of 16 per cent in both value and number of loans.
In the same period home movers borrowed £2.5billion, a 15 per cent decrease in value compared to the previous quarter. The volume of loans advanced to this group also decreased by 18 per cent, to 7,200.
Colin Payne, associate director of Chapelgate Private Finance in Belsize Park, attributed this decline in the number of prospective purchasers in Q1 to pre-election uncertainty in the property market.
He said: “In Q4 2014, 61 per cent of mortgage applications were from first time buyers or movers and that slumped to 40 per cent in Q1.
“The build up to the general election definitely put the breaks on purchases in London in Q1 due to concerns for some around a mansion tax and the dampening effect that may have had on the property market.”
The CML data also showed that whereas lending to home buyers decreased, remortgage lending increased 13 per cent by value and 10 per cent by volume to 10,800 loans in the same quarter and also saw a year-on-year increase from the same period in 2014.
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Mr Payne said: “In Q4 2014 applications for remortgages only accounted for 15 per cent of applications compared to 30 per cent in Q1. Buy-to-let applications were up slightly to 30 per cent in Q1 compared to 24 per cent in Q4.
“With mortgage rates at historical lows borrowers are showing much less lethargy when it comes to re-mortgaging and are actively looking to take advantage of rates before they start to increase.
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“Whilst some lenders have continued to reduce rates many have increased rates to control volumes or simply because they are far less keen to eat further into their margins ensuring that borrowers don’t wish to ‘miss the boat’ on current rates.”
Mr Payne also noted that since the election the number of first time buyers and movers is rising again.
He said: “Since the election the number of FTBs and movers has increased tremendously and is not far short of numbers we experienced in Q4, buoyed by a Conservative majority and with sentiment unlikely to change.”