Loans given to London home movers drop to lowest level since 1991

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The number of home owners in London who borrowed money to move house fell to its lowest levels in 25 years in 2016, according to figures from banks and building societies.

Some 32,400 loans were handed out to London home movers last year, the Council of Mortgage Lenders (CML) said, marking the lowest figure since 1991. 

Last year's figure marks a 10% fall compared with 2015.

London home movers borrowed £335,400 on average in the fourth quarter of 2016, representing nearly four times their income.

Borrowers were typically 37 years old.

By contrast, re-mortgage activity in London was up last year, as home owners took advantage of cheap mortgage rates.

Around 55,500 loans were handed out for re-mortgaging - a 13% increase on 2015.

Paul Smee, CML director general, said: "Home mover activity in particular continues a downward trend, with the fewest loans since 1991.

"Persisting supply and affordability issues appear to be exerting an ongoing restraint on growth, meaning there is some uncertainty around how the market will perform going into 2017.

"By contrast, re-mortgage activity appears to be experiencing a resurgence.

"Competitive mortgage rates aided by low interest rates have sparked re-mortgage levels not seen in the capital since 2008."

Some experts have said recent stamp duty changes, which made the tax cheaper for the majority of home buyers but more expensive for the purchase of top-end homes, have had a dampening effect on the London market.

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said: "Looking forward, we are still seeing some concern on the high street as buyers and sellers try to negotiate on price in a continuing relatively uncertain market.

"Encouragingly, many regard this market as an opportunity to trade property in a more realistic climate."