Bigger rise in house purchase lending in Scotland than UK as whole

The UK as a whole experienced an increase of 26% in volume and 25% in value. Despite this, the proportion of house purchase loans in Scotland stayed static at 9% of the UK total, unchanged since the end of 2010.

The number of loans to first-time buyers rose from 3300 (worth £280million) in the first quarter to 4300 (worth £384million) in the second. This was a larger increase at 30% by volume and 37% by value than the increase experienced by first-time buyers UK-wide. Home mover lending also increased by more in Scotland.

Around 7000 loans (worth £905million) were advanced to home movers in Scotland compared to 5100 loans (worth £628million) in the first quarter.

Scottish first-time buyers typically borrowed 79% of their property’s value in the second quarter, up from 77% in the previous quarter. This in now closer to, although still below, the average of 80% in the UK as a whole. First-time buyers also took out loans on average 2.9 times their income, up from 2.84 in the first quarter but below the 3.19 seen UK-wide.

The lending criteria for home movers do not tend to fluctuate as much as for first-time buyers. From April to June the typical loan-to-value ratio for Scottish home movers increased marginally from 70% to 71%, and now stands one percentage point higher than the UK-wide average.

While in the rest of the UK remortgage activity fell in the second quarter, in Scotland it remained virtually unchanged. There were 8900 remortgage loans taken out compared to 8800 in the first quarter. The value of the loans was again £900million.

Kennedy Foster, policy consultant for CML Scotland, said: "We have seen the expected seasonal increase in mortgage activity in Scotland in the second quarter of 2011, but levels of mortgage activity remain at low levels by historical standards. With the uncertain economic outlook we expect this to continue for the rest of the year."

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