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Highest quarterly house purchase lending levels in Scotland since 2008

26 Nov 13

Highest quarterly house purchase lending levels in Scotland since 2008

The highest quarterly lending level in Scotland since mid-2008 was recorded, as an increasing number of borrowers took out a mortgage loan for house purchase in the third quarter of 2013, new CML data shows. This was similar to trends seen throughout the UK. Scotland also saw first-time buyer and home mover levels increase, with overall home-owner lending for house purchase increasing by 23% year-on year.

Lending for house purchases

As in the UK overall, lending to home-owners for house purchases in Scotland increased in the third quarter, with 15,100 loans being advanced, up by 9% compared to the second quarter of 2013 and up by 23% compared to the third quarter last year.

The value of these loans also increased. Loans advanced for house purchases were worth £1,860m in the third quarter, up in value by 13% on the second quarter of 2013 and by 29% over the same period last year.

Chart 1: House Purchase lending in Scotland, number of loans advanced, and house purchase lending in Scotland as a proportion of the UK total (1 year moving average)

 26.11.2013 Scotland house purchase v2

Source: CML Regulated Mortgage Survey

First-time buyers

In the third quarter of 2013, 6,600 loans were advanced to first-time buyers in Scotland for house purchase, which is the largest single quarter since mid-2008. This was an increase of 8% compared to the second quarter of 2013 and up 32% on quarter three last year.

A total of £670m was advanced to first-time buyers in Scotland in the third quarter of 2013 which was up 12% compared to the second quarter and up 46% compared to the third quarter last year.

First-time buyers in Scotland tended to borrow less relative to income to rest of the UK due to comparatively lower property prices than the UK overall. First-time buyers in Scotland typically borrowed 2.96 times their income, up from 2.91 in the first quarter of the year but considerably lower than the 3.36 times borrowed by first-time buyers in the UK on average.

First-time buyers spent 17.1% of their income on total mortgage payments in the third quarter, a slight decrease on the 17.2% in the second quarter of 2013 and down from 17.8% in the third quarter of last year.

Chart 2: Lending to FTBs in Scotland, number of loans advanced, and lending to FTBs in Scotland as a proportion of the UK total (1 year moving average)

26.11.2013 Scotland FTBs v2

Source: CML Regulated Mortgage Survey

Home movers

Similar to the rest of the UK, lending to home movers increased in the third quarter of 2013 compared to both the second quarter of 2013 and the third quarter last year. A total of 8,500 loans were advanced to home movers in Scotland, an increase of 10% on the second quarter of 2013 and up by 16% on the third quarter last year. The total value of these loans was £1.19bn which was up 13% compared to the second quarter and up 21% on the third quarter of 2012.

Remortgages

Remortgage lending in Scotland continued an upward trend in the third quarter of 2013, with 7,800 loans advanced in the third quarter of 2013, up 10% on the second quarter and up 18% compared to the third quarter last year. In total, £810m was advanced to borrowers, an increase by 11% compared to the second quarter of the year and a 23% increase on the third quarter of 2012.

Chart 3: Remortgage Lending in Scotland: Year-on-year % change in Scotland and the UK

26.11.2013 Scotland remortgage v3

Source: CML Regulated Mortgage Survey

Iain Malloch, chair of CML Scotland, commented:

“It is encouraging to see continued improving lending levels in the Scottish market as economic conditions improve. As with the rest of the UK, it is important to note lending is still only just above half the levels seen during the peak of the market so talk of increased lending over-heating the housing market may be premature.”

"In the early part of the year, the market was being driven by first-time buyers. It is welcome now to see home mover and remortgage lending showing increased levels after a period of stagnation suggesting the upward trend will continue into the new year.”

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 11.3 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 fourth quarter of 2013 will be released on Wednesday 26 February 2014

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