Q3 Scottish mortgage lending up 8pc

Yuan Phoon

November 24, 2011

There were 12,400 loans for house purchase taken out, up from 11,500 in the previous quarter.

UK lending for house purchase increased by 16%.

Loans to first-time buyers and home movers in Scotland also increased in the third quarter. There were 4,600 loans advanced to first-time buyers worth £429m, up 7% by volume and 10% by value.

Home movers took out 7,800 loans worth £1,033m, an increase of 8% by volume and 12% 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 £900m were taken out, a 5% increase on the second quarter with no change in the value.

Compared with the same period last year, this was a 20% increase by volume and 13% by value, a smaller rise than the UK as a whole where remortgage activity grew by 23% and 24% in value.

Kennedy Foster, policy consultant at CML Scotland, said: “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.”

Mark Dyason, director of Edinburgh Mortgage Advice, said: “There is a cautious optimism surrounding the Scottish property market. Times are still tough, economic uncertainty still abounds, but there is a feeling the market has stabilised.

“LTVs have edged up and the increased competition among lenders has led to some highly attractive products, which is diluting the effect of slight rate increases.

“It’s still difficult for first-time buyers to get onto the property ladder but it’s far less difficult than it was six months ago.

“It’s not surprising to see that the number of remortgages has crept up. Even though Bank Rate looks set to stay at its current level for at least another year, a lot of borrowers are finding some of the longer term fixed-rate products too hard to resist.”

Sign up to our daily email