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UK Finance represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation takes on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association. Please go to for wider content and updates from UK Finance.

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What's going on in the sub-markets of the UK?


Published: 28 August 2013 | Author: Bernard Clarke

Today, we have published our quarterly analysis of lending in Scotland, Wales, Northern Ireland and London. Each of these markets constitutes a distinct component - each with different characteristics, and with myriad sub-markets in its own right - of the overall UK housing market.

In the context of housing considerations, there are good reasons to look closely at individual markets within the UK. Scotland, Wales and Northern Ireland each has a distinctive housing policy framework that differs from England, as does London, where the Mayor is able to determine some housing policies.

England dominates the mortgage market. By value, England accounted for 85% of all loans for house purchase in the UK in the second quarter of the year. By number, there were 128,200 house purchase loans advanced in England during the second quarter - out of a UK total of 151,600. By value, UK lending for house purchase totalled £22.8 billion - of which Scotland accounted for £1.74 billion, Wales less than half the Scotland value at £680 million, and Northern Ireland less than a third of the Wales figure at £210 million.

Within both England and the UK, however, London is a large and influential sub-market. Some 20,100 loans for house purchase - worth over £5 billion - were advanced in the capital in the second quarter. Indeed, London accounted for over 16% of all UK loans taken out by first-time buyers - more than the total of first-time buyer loans in Scotland, Wales and Northern Ireland put together.

But housing affordability is - as the world knows - stretched in London, compared with other regions. Despite borrowing only an average of 75% of the property price, first-time buyers in London typically borrowed around 3.7 times their income and paid out around 21% of their gross income on typical capital-and-interest mortgage payments.

By contrast, those in Wales borrowed a significantly higher 85% of value, equivalent to around 3.2 times their income – lower than in London. Welsh buyers also required a significantly less hefty 18% of income to service their capital-and-interest payments. Northern Ireland first-time buyers borrowed 81% of the property price on 2.8 times their income, and needed less than 18% of their income. In Scotland, which saw around 2,700 first-time buyers in the quarter, borrowing typically accounted for 82% of the property's value on 2.9 times income, taking up just over 17% of typical first-time buyer income.

In a nutshell, each of the regions we report on today showed significant market growth - but that does not mean that they, or their lending characteristics, are homogeneous. Nowhere is this more obvious than in the distinction between absolute size, and growth rate - London may be by far the largest of the markets by volume, but house purchase lending in the capital grew by 23% on the previous quarter, whereas in Scotland it grew by 55%.

As we have said previously, the "UK mortgage market" is only ever an abbreviation for the far more complex, dynamic, and interesting patchwork of regional and local conditions that influence lending in the various different locations of the UK.

If you are a CML member or associate, don't forget you can see a full breakdown of lending characteristics across all the regions - including the English regions - in the statistics area of our website.