Home lending in Scotland falls in first quarter of 2015

Lending for homes in Scotland decreased in the first quarter of 2015 by 20% compared to the fourth quarter of 2014 and down 1% year on year, the latest data from the Council of Mortgage Lenders shows.

These loans reflected lending of £1.7 billion, down 13% compared to the previous quarter but up 15% on the first quarter 2014.

First time buyers took out 5,400 loans in Scotland, worth £580 million, down 23% by volume compared to the fourth quarter of 2014 and down 24% by value. Compared to the first quarter of 2014, the number of loans decreased by 7% but the amount borrowed increased by 2%.
 
The CML data also shows that 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 2.9 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.

There were 6,700 loans to home movers valued at £1.1 billion, 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.

Seasonal factors play a part in the lull commonly seen in lending activity during in the beginning of the year, according to Linda Docherty, chair of CML Scotland. ‘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,’ she said.

‘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,’ she explained.

She also pointed out that while overall loan numbers are relatively on par with last year, the value of this lending has climbed 15% as the value of Scottish homes continues to rise. ‘Now that the Land and Buildings Transaction Tax has come into force, buyers will be looking to capitalise on the new savings on offer, as well as competitive loan rates. Combined with the lenders’ appetite to lend, this should assist the housing market bounce back post-election as we enter the summer months,’ she added.

Christine Campbell, managing director of Your Move Scotland, also pointed out that lending in the opening three months of the year is typically lower as the mortgage market is more lethargic before getting back into a rhythm.

‘In light of that, and despite having to negotiate an unpredictable general election, housing market activity has shown some real perseverance throughout Scotland. In particular, the annual rise in loans to home movers is an encouraging sign that confidence in the housing market recovery is filtering up through the listing ladder as it’s not just first time demand at the bottom rungs that is needed to get the wheels turning,’ she added.

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Source: Property News Spain