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Home-owner house purchase lending up 15% in Scotland in first quarter

Published: 27 May 2015

New CML data released today shows the characteristics of lending in Scotland in the first quarter of 2015, including first-time buyer, home mover and remortgage lending.

In the first quarter of 2015:

First-time buyers took out 5,400 loans in Scotland, worth £580m. This was down compared to the fourth quarter 23% by volume and 24% by value. Compared to the first quarter of 2014, the number of loans decreased by 7% but the amount borrowed increased by 2%.

There were 6,700 loans to home movers, valued at £1.1bn. This was down 17% in volume and down 6% in value compared to the fourth quarter 2014. Compared to the first quarter of 2014, there was an increase of 5% in volume and an increase of 24% by value.

The total number of remortgage loans totalled 5,900 loans (£660m), which was up 4% in volume and 2% by value on the fourth quarter 2014. Compared to the first quarter of 2014, activity was down 3% by volume and 1% by value.

Lending for home-owner house purchase

Home-owner house purchase in Scotland decreased in the first quarter of 2015 to 12,100 loans, down 20% on the fourth quarter and 1% year-on-year compared to quarter one 2014. These loans reflected lending of £1.7bn, down 13% compared to the previous quarter but up 15% on the first quarter 2014.

Chart 1: Total number of home-owner house purchase loans advanced in Scotland per quarter

Chart of total number of home-owner house purchase loans advanced in Scotland per quarter

Source: CML

Lending to first-time buyers

First-time buyer affordability changed slightly in Scotland quarter-on-quarter with first-time buyers typically borrowing 2.86 times their gross income, less than the 2.90 income multiple in the fourth quarter 2014 and less than the UK average of 3.37.

The typical loan size for first-time buyers was £94,795 in the first quarter, down from £97,200 in the previous quarter. The typical gross income of a first-time buyer household was £33,499 compared to £33,965 in the previous period.

First-time buyers' payment burden changed slightly in the first quarter at 17.2% of gross income being spent to cover capital and interest payments, higher than the fourth quarter's 16.8% but lower than the 19% UK average.

Chart 2: Total number of first-time buyer loans advanced in Scotland per quarter

Chart of total number of first-time buyer loans advanced in Scotland per quarter

Source: CML

Lending to home movers

Home movers typically borrowed 2.64 times their gross income which was unchanged from the previous quarter.

The typical loan size for home movers was £138,395 in first quarter, up from £128,142 in the previous quarter. The typical gross household income of a home mover was £53,924 in first quarter compared to £50,766 in the fourth quarter 2014.

Home movers' payment burden remained relatively low in Scotland at 16.8% of gross income being spent to cover monthly capital and interest payments, unchanged from the previous quarter but considerably less than the 18.5% UK average.

Chart 3: Total number of home mover loans advanced in Scotland per quarter

Chart of total number of home mover loans advanced in Scotland per quarter

Source: CML

Lending to home owners for remortgage

The total number of remortgage loans in Scotland in the first quarter totalled 5,900 loans (£660m), which was up 4% in volume and 2% by value on the fourth quarter 2014. Compared to the first quarter of 2014, activity was down 3% by volume and 1% by value.

Chart 4: Total number of remortgage loans advanced in Scotland per quarter

Chart of total number of remortgage loans advanced in Scotland per quarter

Source: CML

 

Linda Docherty, chair of CML Scotland, commented:

“Seasonal factors play a part in the lull commonly seen in lending activity during in the beginning of the year, as seen across the UK this period. What is encouraging is that home movers have been increasing year-on-year and first-time buyer and remortgage levels are relatively consistent with last 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 11.1 million mortgages in the UK, with loans worth over £1.3 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 second quarter of 2015 will be released on Wednesday 26 August 2015.

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