Scotland sees more house purchase lending than rest of UK, data shows

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Mortgages up in Scotland compared to UK

House purchase lending in Scotland rose by more than the UK as a whole in the second quarter of 2011, according to new data from the Council of Mortgage Lenders.

Some 11,300 loans for house purchase, worth £1.3 billion, were taken out in the second quarter of 2011 in Scotland, a rise of 36% in number and 42% in volume from the first quarter.

Meanwhile, 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 3,300 worth £280 million in the first quarter to 4,300 worth £384 million 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. Some 7,000 loans worth £905 million were advanced to home movers in Scotland compared to 5,100 loans worth £628 million 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 8,900 remortgage loans taken out compared to 8,800 in the first quarter. The value of the loans was again £900 million.

‘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,’ said Kennedy Foster, policy consultant for CML Scotland.

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