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Scottish mortgage market begins to stabilise in second quarter

The rise in mortgage lending in Scotland was spread evenly across first-time buyers and home movers. There were 4300 loans to first-time buyers, up 54% from the previous quarter, and 7200 loans to home movers, up 53% from the first quarter.

There is some evidence that the tightening in lending criteria is slowing. First-time buyers typically put down a 25% deposit in the second quarter, unchanged from the previous quarter but up from 13% a year earlier. Home movers typically borrowed 70% of the property’s value, down from 71% in the previous quarter and 73% in the same quarter a year earlier.

Income multiples rose modestly in the second quarter. First-time buyers typically borrowed 2.85 times their income (3.06 across the UK), up from 2.74 in the first quarter of 2009. Home movers typically borrowed 2.55 times their income (2.73 across the UK), compared with 2.51 in the previous quarter.

CML Policy consultant Kennedy Foster said: "Lending in the Scottish mortgage market is beginning to stabilise, albeit at very low levels.

"This is encouraging and mirrors the pick up in the housing market. But it will be a slow path to full recovery with significant obstacles presented by the restricted access to mortgage funding, fewer active mortgage lenders in the market, rising unemployment and limited consumer demand."

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