New Council of Mortgage Lenders (CML) data on the characteristics of
lending in Scotland in the second quarter of 2015 outlining mortgage
lending to first-time buyers, home movers and remortagors.
Lending in the second quarter 2015:
• Home-owner house purchase activity came out of the traditional seasonal dip in the first quarter to see large growth in numbers both quarter-on-quarter and, to a lesser extent, year-on-year.
• First-time buyers increased by numbers and amount borrowed both in comparison to the first quarter and the second quarter in 2014.
• Home mover activity in Scotland saw a substantial quarter-on-quarter increase, but remained unchanged from the second quarter of 2014.
• Remortgage lending rebounded out of a stagnant period to total the highest volumes since the last quarter of 2013.
Kennedy Foster, CML Policy Consultant, Scotland, commented:
“After three quarters of consecutive decline, it is welcome to see house purchase levels in Scotland bounce back finally. This quarter saw the highest number of loans to those purchasing a home since the second quarter of 2008. With competitive mortgage deals, better affordability than the UK overall and the replacement of stamp duty with a new taxation system that benefits the majority of borrowers, it appears conditions are relatively favourable at the moment in Scotland for those looking to buy a home.”
Lending for house purchase and remortgage
House purchase lending in Scotland saw a large quarter-on-quarter rise, in the both number of loans and amount borrowed, compared to the first quarter of 2015. While the rise year-on-year compared to the second quarter of 2014 was less substantial, this was the highest amount advanced and number of loans since the second quarter of 2008.
The breakdown in house purchase lending remains relatively evenly split, with first-time buyers accounting for 48% and home movers 52% of all house purchase activity.
Remortgage lending also saw a rise year-on-year and quarter-on-quarter in the amount borrowed and in the number of loans, despite the previous four quarters having consistent levels.
Lending to first-time buyers
First-time buyers in Scotland typically borrowed 3.02 times their gross household income, up from 2.84 the previous quarter but less than the UK average of 3.38.
The typical loan size for first-time buyers was £101,515 in the second quarter, up from £94,795 in the first quarter. The typical gross income of a first-time buyer household was £34,000 also up compared to £33,677 in the first quarter.
First-time buyers' payment burden in the second quarter was 17.2% of gross income to cover capital and interest payments, up on the first quarter's 17.0% but lower than the 18.4% UK average.
Lending to home movers
Home movers in Scotland typically borrowed 2.70 times their gross household income, up from 2.61 the previous quarter but less than the same quarter last year and the UK average of 3.08.
The typical loan size for home movers was £133,000 in the second quarter, down from £138,000 the previous quarter and lower than the £160,994 UK average. The typical gross income of a home movers' household was £50,809, also down compared to £54,159 in the first quarter.
Home movers' payment burden in the second quarter saw them spend 16.4% of their gross household income being spent to cover capital and interest payments, a slight change from 16.7% in the first quarter, but lower than the 18% UK average.
(Source - CML Press Release)