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Number of first-time buyers in Scotland continues growth in third quarter

Published: 26 November 2012

The number of loans advanced to first-time buyers increased again in the third quarter, marking the highest number of first-time buyers in nearly three years, according to new figures released today by the Council of Mortgage Lenders in Scotland.

There were 5,100 loans advanced to first-time buyers in the third quarter, a 6% increase compared to the second quarter and up by 9% on the same period last year. This represented the third successive quarter of growth but below the rate of growth shown in the rest of the UK at 16%.

By value, first-time buyers in Scotland borrowed £460 million, up from £450 million in the previous quarter and £440 million in the third quarter of last year.

As in the UK overall, first-time buyers typically borrowed 80% of their property value – a figure largely unchanged in the last 18 months.

The percentage of income spent on mortgage payments by first-time buyers in Scotland also remained stable at 17.8%, spending less of their income than in the UK overall (20.1%).

First-time buyers typically borrowed 2.83 times their income, lower than the 3.25 in the UK, and reflecting the lower house prices in Scotland. A total of 3,200 first-time buyers bought a property under £125,000 in the third quarter, falling below the stamp duty threshold, and representing 63% of all loans to first-time buyers compared to 39% in the UK.

 Chart 1: First-time buyers number of loans and average LTV, Scotland

Chart 1 Sco-Q3 2012Source: CML regulated mortgage survey

While there was an increase in lending to first-time buyers in Scotland, there was a slight fall in lending to home movers in the third quarter.

There were 7,400 loans advanced to home movers, a 3% fall compared to the third quarter (7,600 loans) and down by 6% on the same period last year (7,900 loans). By value, home movers borrowed £1 billion in the third quarter of 2012, down from £1.01 billion in the previous quarter and £1.05 billion in the same quarter of 2011.

In contrast, the number of loans taken out by home movers in the UK in the third quarter rose by 12%.

Chart 2: House Purchase lending in Scotland, number of loans advances, and house purchase lending in Scotland as a proportion of the UK total (1 year moving average)

Scotland Q3 2012 Chart2Source: CML regulated mortgage survey

The increase in first-time buyers and slight fall in home movers led to a small increase in the total number of house purchase loans advanced in the third quarter. A total of 12,500 house purchase loans were advanced (worth £1,460 million), up by 1% compared to the second quarter, but down by 1% on the same period in 2011. While the number of loans increased, the value of loans remained the same as in the second quarter at £1,460 million.

Compared to the rest of the UK, loans for house purchase exhibited a weaker rate of growth, where house purchase lending increased by 13%.

Chart 3: Number of loans advanced for remortgage year-on-year % change UK v Scotland

Chart 3: Scotland Q3 2012Source: CML regulated mortgage survey

As in the UK overall, there was a fall in remortgage lending in Scotland compared to both the previous quarter and the third quarter of 2011. A total of £670 million was advanced to borrowers remortgaging, down from £740 million in the last quarter and a 28% fall compared to the £930 million advanced this time last year.

Iain Malloch, chair of CML Scotland, commented:

"The boost in first-time buyers is encouraging but the rest of the market still remains broadly flat. The Funding for Lending scheme is likely to assist with growth going forward and we welcome the MI New Home scheme – enabling people to access higher loan-to-value mortgages on new build properties – but it’s still too early to see any meaningful effects flowing into the market as yet."

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.


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