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Most Scottish borrowers still aspiring to be home-owners as first-time buyer activity increases in first quarter

Published: 28 May 2013

Home-ownership is the long-term tenure of choice for most Scottish adults according to findings released today by the Council of Mortgage Lenders based on a survey undertaken by YouGov1.

78% of adults in Scotland would like to be home-owners in 10 years time according to new research undertaken by YouGov, on a par with the rest of Great Britain.

Chart 1: Home-ownership preferences in 10 years' time in Scotland and in GB, by age group, %

Scotland yougov

Source: CML calculations based on YouGov survey

In the shorter term, 46% of those surveyed would like to buy a new home in the next 2-3 years (either first home or subsequent), and 37% of these think it is likely that they will be able to do so.

Separate data released today by the CML shows an increase in lending to first-time buyers in Scotland in the first quarter compared to the same period last year, while home mover lending and remortgage lending was subdued.

First-time buyers

In the first quarter of 2013, a total of 4,500 loans were advanced to first-time buyers in Scotland. This represented a 10% increase on the first quarter of 2012 (4,100 loans) but there was a seasonal fall compared to the fourth quarter of 2012 (5,300 loans).

Distortions caused by the end of the stamp duty holiday in March last year were less pronounced in Scotland than in the UK overall. Lower house prices in Scotland, on average, means that a larger proportion (typically around 60% compared to 40% in the UK) of first-time buyers in Scotland buy properties valued at less than £125,000 - below the stamp duty threshold.

With lower house prices, first-time buyers in Scotland continued to borrow less relative to their income and spend a smaller proportion of their income on mortgage payments than in the UK. First-time buyers in Scotland typically borrowed 2.81 times their income and spent 17% of their income on mortgage payments, lower than the 3.23 times borrowed by first-time buyers in the UK who spent 19.5% of their income on mortgage payments.

As in the UK overall, first-time buyers typically borrowed 80% of their property's value.

Chart 2: Lending to FTBs in Scotland, number of loans advanced and average LTV ratio

28.05.13 Scotland lending to FTBs in Scotland

Source: CML regulated mortgage survey

Home movers

While there a year-on-year increase in lending to first-time buyers in Scotland, there was a fall in lending to home movers.

A total of 5,500 loans (worth £710 million) were advanced to home movers, compared to 5,600 loans (worth £730 million) in the first quarter last year. This represented a 24% fall on the fourth quarter of last year and a 2% fall compared to the first quarter in 2012, likely to be partly associated with the effect of the end of the first-time buyer stamp duty holiday in March last year.

House purchase lending 

Despite the slight fall in home mover lending, the rise in the number of first-time buyers contributed to a small increase in house purchase lending compared to the first quarter last year. A total of 9,900 house purchase loans (worth £1.1 billion) were advanced in Scotland in the first quarter.

Chart 3: House Purchase lending in Scotland, number of loans advances, and house purchase lending in Scotland as a proportion of the UK total

Scotland house purchase q1 2013

Source: CML regulated mortgage survey

Remortgage lending

Following a similar pattern to the UK overall, remortgage lending in Scotland continued to be subdued. A total of £570 million was advanced to borrowers remortgaging in Scotland in the first quarter, a 25% fall compared to the first quarter of 2012, and down by 20% compared to the previous quarter.

Iain Malloch, chair of CML Scotland, commented:

"With most adults in Scotland still viewing home-ownership as their tenure of choice and with more high loan-to-value mortgages now available, conditions for borrowers looking to either buy or move home are continuing to improve.

"The announcement of a new-build shared equity scheme, the continuation of MI New Home and the launch of the Help to Buy scheme next year, should provide a further boost to the Scottish mortgage market."

Notes to editors

1. These findings are CML calculations based on a poll conducted by YouGov plc with a total sample size of 8183 GB adults, 610 of who lived in Scotland. Fieldwork was undertaken between  March 13 and 15 when 4,045 GB adults were surveyed, and March 25 to 27 when a further 4,138 were questioned.  Figures have been weighted and are representative of all GB adults (aged 18+).

2. 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.

3. Source: CML Regulated Mortgage Survey

4. 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.

5. Data for the second quarter of 2013 will now be released on the revised date - Wednesday 28 August 2013.


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