Lending to London's home movers sinks as first-time buyers edge onto the property market

Helen Cahill
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A stamp duty hike on second homes has been credited with deterring property investors from buying (Source: Getty)

Home movers are releasing their grip on London's housing market, as data released from the Council of Mortgage Lenders (CML) shows they took out fewer loans in the second quarter.

CML said home movers withdrew 6,700 loans in the second quarter, a fall of 37 per cent as compared to the first quarter of 2016.

The amount of money borrowed by home movers in London fell by 41 per cent in the second quarter as compared to the first as "many buyers sought to complete purchases before changes to stamp duty", CML's director general Paul Smee said.

A stamp duty hike on second homes came into effect at the beginning of April, deterring property investors from buying.

Read more: Property transactions defied expectations of a Brexit-related crash in July

London's first-time buyers borrowed £3bn in the second quarter, up three per cent on the first quarter and up 10 per cent compared to the same quarter last year.

The total amount borrowed by Londoners - £5.5bn - fell 23 per cent quarter-on-quarter.

Jeremy Leaf, north London estate agent and former RICS residential chairman said the figures were "a little historic" but that they were evidence of a trend which started before the referendum.

"First-time buyers are taking advantage of rock-bottom mortgage rates and less competition from investors who are reluctant to join the buy to let market or expand their portfolios - bearing in mind the changes to stamp duty and other regulations," Leaf said.

Read more: First time buyers get a look-in as landlords ease off London property

"Since the referendum we have noticed more of a 'back to work' mentality among home movers with more new buyers registering and more property listings. There is a new mood of realism, with people getting on with it."

Smee said:

The second quarter data largely pre-dates the EU referendum. While it will take time to see how Brexit may affect the market, the London mortgage market clearly remains active and firmly open for business.

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