The downturn in mortgage lending continued in the third quarter with 15,100 house purchase loans granted in Scotland, an 18% decline from the previous quarter, according to new data from the Council of Mortgage Lenders Scotland.

A similar decline was experienced across the UK in the same period. However, Scotland continues to account for a record high share of new UK house purchase lending (12%).

There was a fall in both the typical percentage advance and income multiple. The average Scot borrowed 75% of the property’s value in the third quarter and 2.78 times their income, down from 77% and 2.88 in the second quarter of 2008.


There were 5,300 loans to Scottish first-time buyers worth £481 million, down from 6,600 worth £622 million in the previous quarter. The typical first-time buyer put down a deposit of 16%.

Interest payments consumed 18.2% of the average first-time buyer's income, edging down from a peak of 18.9% in the fourth quarter of 2007.

Remortgaging declined in the third quarter, with 18,000 loans worth £1.9 billion, and may remain subdued as borrowers coming to the end of fixed-rate deals revert to attractively priced variable rates.

A CML policy consultant, Kennedy Foster, said: "The year-on year decline in house purchase lending has been less pronounced in Scotland.

"As the Crosby report recognised earlier this week, intervention is needed to restore the availability of mortgages and we hope to see its recommendations implemented swiftly. This would help address the mortgage supply issues, but consumer demand for loans will continue to fall away in the weaker economic outlook."

(GK)