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Number of Scottish first-time buyers grows in contrast to the rest of the UK

24 Aug 12

Number of Scottish first-time buyers grows in contrast to the rest of the UK

The number of first-time buyers in Scotland rose in the second quarter of 2012, bucking the overall UK trend, according to new figures released today by the Council of Mortgage Lenders in Scotland.

The number of first-time buyers increased by 20% compared to the first quarter of 2012. This represented a 9% increase on the same quarter in 2011 and the highest number of loans taken out by first-time buyers since the third quarter of 2010.

Overall, 4,800 loans were taken out by first-time buyers, up from 4,000 loans in the previous quarter and 4,400 loans in the second quarter of 2011.

By value, first-time buyers in Scotland borrowed £450 million, the highest total since the last quarter of 2009.

The increase in first-time buyers in Scotland compared favourably with the UK, where lending to first-time buyers fell by 3% in this quarter compared to the first quarter of 2012.

The rise in first-time buying activity was accompanied by a marginal increase in the percentage of income spent on mortgage payments, but first-time buyers still spent less than in the UK overall.

First-buyers in Scotland spent 17.8% of their income on capital and interest payments, an increase from 17.7% in the previous quarter, but less than the 19.6% overall UK average.

In line with the first quarter of 2012, the loan-to-value ratio (LTV) remained at 80%, up from 79% in the second quarter of 2011.

First-time buyers number of loans and average LTV, Scotland

Chart 1 - Scotland 24-8-2012 Source: CML regulated mortgage survey

As well as an increase in lending to first-time buyers, lending to home movers contributed towards an overall increase in house purchase lending.

There were 7,600 loans advanced to home movers in Scotland, an increase of 36% compared to the first quarter of 2012. This also represented a 6% increase compared to the same quarter last year. By value, they borrowed £1.01 billion in the second quarter of 2012, up from £720 million in the previous quarter and £940 million in the same quarter of 2011.

In comparison, the increase in lending to home movers in the UK was flatter in the second quarter of 2012, with the number of loans taken out by home movers in the UK increasing by 13%.

Number of loans for house purchase year-on-year % change UK v Scotland

Chart 2 - Scotland 24-8-2012

Source: CML regulated mortgage survey

Overall, there were 12,400 loans worth over £1.46 billion taken out for house purchase in Scotland in the second quarter of 2012. This marked a 29% increase on the first quarter of 2012 and a 7% increase compared to the second quarter of 2011. By value, house purchase loans increased by 33%, up from £1.1 billion in the previous quarter and £1.3 billion in the same quarter of 2011.

There was also stronger rate of growth in Scotland than in the UK overall where house purchase lending increased by 6%, an increase by 8% in value, compared to the previous quarter.

Number of loans advanced for remortgage year-on-year % change UK v Scotland

Chart 3 - Scotland 24-8-2012

Source: CML regulated mortgage survey

The number of loans advanced for remortgaging dropped in Scotland compared to both the previous quarter and the second quarter of 2011. Matching the trend in the UK, £740 million was advanced to borrowers remortgaging, down from £760 million in the last quarter. Remortgaging loans also fell 14% from the £860 million advanced at the same time last year.

In the UK, loans advanced for remortgaging fell to £10.4 billion down from £10.8 billion in the same quarter of last year, and from £11.1 billion in the first quarter of this year.

Iain Malloch, Chair of CML Scotland, commented:

“It is encouraging to see some positive signs emerging from the housing market in Scotland. An increase in overall home lending in contrast to the rest of the UK is encouraging, and the Scottish government is working with the building and lending industries on a forthcoming scheme to enable people to access higher loan-to-value mortgages on new build properties.

“We still expect to see challenging conditions in the housing market in Scotland but we hope to see an easing of constraints throughout the rest of 2012 and beyond.”

Notes to editors

1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 95% of all residential mortgage lending in the UK. There are 11.2 million mortgages in the UK, with loans worth over £1.2 trillion.

2. Source: CML Regulated Mortgage Survey

3. The Council of Mortgage Lenders does not publish statistics for mortgage approvals. The data in our monthly Regulated Mortgage Survey and gross lending press releases relate to mortgage advances only. A mortgage approval is the firm offer to a customer of a specific amount of credit secured against a particular property. A mortgage advance is the total amount of loan actually provided to the buyer, by the lender. Please see the mortgage statistics timeline on our website for further information.

4. Data for the third quarter of 2012 will be released on Monday 26 November 2012.

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