The mortgage market in Scotland started 2011 in a similar position to the UK as a whole, according to data released today by CML Scotland.

House purchase lending was at its lowest for two years and remortgaging increased due to interest rate rise concerns.

A total of 8,000 loans, worth £888 million, were taken out for house purchase in the first quarter of 2011 in Scotland, a 27% fall by number (29% by value) compared the previous quarter and 19% lower (by volume and value) than the first quarter of 2010. Given the fact that lending in the early months of last year was depressed following the end of the earlier stamp duty concession, the fall from the first quarter of 2010 represents a substantial year-on-year decline.

40% of house purchase loans advanced in Scotland in the first three months of the year were to first-time buyers, up from 35% in the previous quarter. The proportion is slightly higher than the UK as a whole, where first-time buyers increased from 36% to 37% in the first quarter.


Loans to both first-time buyers and home movers fell in the first quarter in Scotland. There were 3,200 loans worth £270 million taken out by first-time buyers, down 18% by volume and 21% by value.

The number of loans was also down compared to the first quarter of 2010 – 20% by volume and 19% by value. Lending to home movers fell by over 30% (31% by volume and 33% by value) in the first quarter when 4,900 loans worth £618 million were taken out. And it was down 17% by volume (18% by value) from the same period last year.

Lending criteria for both groups in the first quarter were similar to the last three months of 2010. First-time buyers borrowed on average 77% of their property's value, up from 76% but below the 79% average for the UK as a whole. They typically borrowed 2.85 their income (2.86 in the previous three months) which was below the 3.15 seen UK-wide. Home movers borrowed 70% of their property's value, unchanged from the last quarter of 2010, and more than the UK as a whole at 68%. Their interest payments consumed on average 9.1% of their income, virtually identical to 9.0% in the previous quarter but lower than the UK as a whole.

As in the rest of the UK, remortgaging picked up in Scotland in the first three months of the year. There were 8,800 loans taken out for remortgage, worth £900 million, an increase of 16% by volume and 13% by value from the previous quarter.

CML Scotland policy consultant Kennedy Foster said: "The picture for Scotland looks very similar to that of the rest of the UK with subdued house purchase lending and a resurgence in remortgaging. We expect remortgage activity to grow throughout the UK further in the next quarter as recent expectations of a rise in base rate, although unfounded, led to an increase in remortgage approvals in the first quarter."

(GK)