Scottish house purchase lending up 39 per cent in second quarter

According to the latest data from theCouncil of Mortgage Lenders, while the year-on-year comparison for Q2 was less substantial, banks still provided the highest amount in terms of total amount loaned and number of loans supplied since the second quarter of 2008.

The CML also said that the breakdown in house purchase lending remains relatively evenly split, with first-time buyers accounting for 48 per cent and home movers 52 per cent 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.

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 per cent of their gross household income being spent to cover capital and interest payments, a slight change from 16.7 per cent in the first quarter, but lower than the 18 per cent UK average.

Kennedy Foster, CML policy consultant, Scotland, said: “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.”

Meanwhile, separate figures from the British Banker’s Association showed overall mortgage approvals numbers in the UK as a whole during July were 15 per cent higher than a year ago, with house purchases rising 11 per cent and remortgaging nearly 29 per cent up – to its highest level for 4 years – as borrowers continue to lock in to fixed rates to maintain control of their mortgage costs.

The BBA also said lending to larger companies increased in July but overall continues to be fairly subdued. However, capital market finance grew by some £11.1 billion in the first seven months of 2015.

In the wider credit card market the number of credit card purchases in July was 6 per cent higher than a year before and continues to exceed growth in credit card borrowing (+4 per cent).

Richard Woolhouse, chief economist at the BBA, said: “These figures show that thousands of us managed to tear ourselves away from the Ashes series to remortgage during July.

“This was a 29 per cent surge on 12 months before and the highest figure we’ve seen for four years. Savvy homeowners are snapping up competitive deals before an expected increase in interest rates.

“There were concerns that new regulations had made applying for a mortgage more onerous. But remortgaging is still a straightforward process that can take even less time than Alastair Cook and his men took to beat Australia.”