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Lending to first-time buyers in London at highest level since 2007

PUBLISHED: 17:05 26 November 2014 | UPDATED: 11:41 27 November 2014

Lending to first time buyers in London at highest level since June 2007

Lending to first time buyers in London at highest level since June 2007

PA Wire/Press Association Images

Mortgage lending to first-time buyers in London has risen to its highest level since 2007 in the past quarter, with 13,300 loans worth £3.3 billion being offered.

Figures from banks and building societies amassed by the Council of Mortgage Lenders show the average price of homes being bought by first-time buyers also increased this quarter, with 66 percent of first-time buyers buying properties priced at more than £250,000, compared to 54 pc in the same period last year.

The figures showed that these London buyers were borrowing 3.86 times their gross household income, which was typically £58,000 in Q3.

This is compared to Q2 when the figure was 3.90 times a typical gross household income of £55,255.

The typical loan size for first-time buyers was £221,997 in the third quarter, up from £212,500 in the previous quarter. The typical gross income of a first-time buyer household was £58,000 compared to £55,255 in the second quarter.

According to Stefano Andrean, a sales associate at Hadleigh Residential in Belsize Park, the situation in prime areas of north London is comparable but amplified and tends to be at the upper end of the scale.

Mr Andrean said: “We get quite a few first time buyers in this area. They tend to buy flats as the cheapest house you’ll find in this area would be around £1 million.

“The people we have buying around here are normally in their early 30s, bankers, city lawyers and people working in the media industry. I’d say around 60 pc are looking for properties under £2 million.

“The reason we have so many bankers is, aside from their high salaries, they also get annual bonuses and you really need that lump sum, it’s very hard to save up the amount you’d need for a deposit round here.”

“We did have one 19-year-old whose parents bought him a £2 million house in Primrose Hill, but that’s something of an anomaly, and it was still in his parents’ names.”

While prices vary by as much as £1,000 per square foot between the areas Hadleigh Residential covers, which include Belsize Park, Primrose Hill, Chalk Farm and Kentish Town, Mr Andrean estimates that two people buying for the first time in the area will spend an average of £800,000.

Towards this they would probably contribute a deposit of around £80,000 each and would both need to be earning around £80,000 to be considered for a mortgage.

With prices as high as this, Amit Batra, managing director of Lexingtons, says that many first time buyers who would like to buy in Camden are finding themselves pushed out of the borough.

“£250,000 doesn’t get you very much in NW3 or NW6 but if you look further afield you may find more for your money.” he said.

“There are first time buyers in the market but they’re outpriced because they haven’t got the deposit. People are being pushed out from where they’d like to be and other areas are getting far more first time buyers than the established areas.”

hadleigh.co.uk

lexingtons.com

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