New Council of Mortgage Lenders (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.
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.
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.
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.
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.
"It is likely that we will see an upward trend in lending moving forward as we approach the summer months. The introduction in Scotland of the Land and Buildings Transaction Tax will mean the majority of new borrowers paying less tax, which should also provide a boost to the market."
(Source - CML Press Release)