Increase for Scottish mortgage lending in third quarter of 2011

Loans to first-time buyers and home movers in Scotland increased in the third quarter. There were 4,600 loans advanced to first-time buyers, worth £429 million, up 7% by volume and 10% by value (in the UK, the rise was 13% by volume and 16% by value). Home movers took out 7,800 loans, worth £1,033 million, an increase of 8% by volume and 12% by value (in the UK, the rise was 19% by volume and 23% by value).

There were small improvements in lending criteria for all Scottish house purchasers in the third quarter. First-time buyers typically borrowed 80% of their property’s value, up from 79% in the second quarter, bringing the average loan-to-value ratio in Scotland in line with the UK average. Home movers borrowed on average slightly less of their property’s value from July to September than April to June – 70% compared to 71% but they spent 8.8% of their income on mortgage interest payments, the lowest since records began in 2005.

In the third quarter a total of 9,600 remortgage loans, worth £900 million were taken out, a 5% increase on the second quarter (no change in the value). Compared with the same period last year, this was a 20% increase by volume (13% by value), a smaller rise than the UK as a whole where remortgage activity grew by 23% (24% in value).

CML Scotland policy consultant Kennedy Foster commented:

"The mortgage market in Scotland is currently stable albeit at a low level. We anticipate growth is likely to remain slow going forward, although welcome developments, such as smaller deposits, have emerged and a Scottish mortgage indemnity scheme for new build properties is being introduced. The uncertain economic outlook and low levels of consumer confidence will likely result in a continuing constrained mortgage market in Scotland as in the UK in general.”

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