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Lending in Scotland rose in the third quarter


Published: 30 November 2011 | Author: Bernard Clarke

Lending for house purchase in Scotland increased by 8% in the third quarter of this year, our data showed. Lenders advanced 12,400 loans, up from 11,500 in the previous three months. In the UK as a whole, lending for house purchase increased by 16% over the same period. Overall, mortgage market activity in Scotland remains broadly stable, but subdued. 

In the third quarter, there were 4,600 loans to first-time buyers, worth £429 million, up 7% by volume and 10% by value (in the UK, the increase was 13% by volume and 16% by value). 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).

The last quarter also saw modest improvements in lending criteria for Scottish buyers. First-time buyers borrowed on average 80% of the property’s value, up from 79% in the second quarter. That brought the average loan-to-value ratio for this group in line with first-time buyers in the rest of the UK.

Movers borrowed a slightly smaller proportion of the property’s value in the third quarter – 70%, compared with 71% in the preceding three months. But mortgage interest payments consumed only 8.8% of the income of the average mover in Scotland, the lowest proportion since records began in 2005.

The third quarter saw 9,600 loans for remortgaging in Scotland, worth £900 million. That was a 5% increase in the number for the preceding three months (although the value of remortgaging was unchanged). Compared with a year ago, the number of loans for remortgaging increased by 20% (13% by value), a smaller increase than in the UK as a whole, where remortgaging rose by 23% (24% by value).

Growth in mortgage market activity in Scotland is likely to remain slow, although there have been some welcome developments, including a move towards smaller deposits and plans for a mortgage indemnity scheme for newly-built property. But the continuing uncertain economic outlook and low levels of consumer confidence are likely to continue to constrain the mortgage market in Scotland, as well as in the rest of the UK.