Scottish movers use less income for mortgages

CML data shows that 12,700 loans for house purchase (worth £1.4 billion) were advanced in Scotland in the second quarter, up from 9,800 (worth £1.1 billion) in the first quarter. This was a larger increase than the rise seen in the UK as a whole but the first quarter had been artificially weak across the whole country due to the end of the stamp duty holiday at the turn of the year. House purchase loans were also up from 11,500 (worth £1.2 billion) in the same period a year ago.

First-time buyers took out 4,700 loans (worth £419 million) in Scotland from April to May, up 18% in volume and 27% in value from January to March and up 9% in volume and 13% in value from the same period last year. There were modest signs of a further easing in lending criteria in the second quarter with first-time buyer deposits shrinking for the second quarter running – they needed on average 21% deposit compared to 23% in the first quarter. In the UK as a whole there have been recent signs that the easing has slowed, so we do not necessarily expect this trend to continue next quarter.

Home movers in Scotland took out 8,000 loans (worth £1 billion) in the second quarter – up 36% in volume and 34% in value from the first quarter and 11% in volume and 15% in value on the second quarter in 2009. Home movers saw a modest decrease in the size of deposits with the average being 29%, and a slight increase in income multiples to 2.67.

Reflecting a similar trend across the UK, remortgaging activity in Scotland remains extremely subdued. The 8,000 loans for remortgage (worth £800 million) were up 14% in both volume and value from January to March, but down 11% from a year ago.

CML Scotland policy consultant Kennedy Foster said:

"There have been some positive signs for the housing and mortgage markets in Scotland in recent months with increased activity and reduced deposits and it’s encouraging to see that for home movers, mortgage interest payments as a share of income currently cost the least out of any region of the UK. But the hard times are not completely behind us yet. Regulatory and funding pressures will affect Scotland as much as the rest of the UK and the upward trend we have seen in the second quarter may not continue to the end of the year."

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