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Mortgages for million-pound London homes highest in 10 years
[LONDON] Homeowners are stretching themselves to buy the most expensive properties in London.
58 per cent of people who bought homes for 1 million pounds (S$1.91 million) or more in the capital last year had to use a mortgage, according to data compiled by Hamptons International.
That was the highest proportion in 10 years and compares with 31 per cent of buyers during the financial crisis in 2009, the broker said.
"In the more expensive parts of London and south east England, a 1 million-pound home is now more likely to be a normal home rather than an oligarch's mansion," Fionnuala Earley, director of research at the broker, said in the report.
The average loan-to-value for a home costing from 1 million pounds to 2 million pounds is 40 per cent, the Hamptons data show. Over the last eight years, demand from buyers has risen most for mortgages with LTVs of less than 40 per cent.
"The need to borrow that little bit extra has crept in at the higher end" of the market, according to the report.
The proportion of mortgaged buyers of the most expensive homes outside London has grown much more slowly, rising to 46 per cent last year from 34 per cent in 2009, the data shows.
Property prices in London's best districts have risen almost 30 per cent in the past five years, according to broker Savills Plc.
Banks have moved back into lending for the costliest properties in the last 12 months, according to Andrew Montlake, a director at mortgage broker Coreco Partners LLP.
However, some are cutting back on home loans to overseas bankers based in London who are paid bonuses in euros or dollars after the introduction of the European Union's mortgage credit directive in March, he said.
The rules mean lenders must limit exchange-rate risk for the borrower.