Mortgage News
Scottish market slow to start in 2010
House purchase lending in Scotland fell 33% in the first three months of 2010, closely mirroring the rest of the UK, according to the CML.
CML figures showed that there were 9700 loans to homebuyers in Q1 2010 worth £1.1bn, down from 14,400 (worth £1.6bn) in Q4 2009.
The CML noted that the fall reflects the fact that many homebuyers who would have normally bought in early 2010 brought forward their purchases in order to take advantage of the Stamp Duty holiday on properties below £175,000 before it ended in December last year.
In addition, the severe winter weather in January and February also affected the market.
Despite this, Scottish homebuyer loans were up 28% by volume in Q1 2010 and 36% by value from the low of 7600 loans in Q1 2009.
Scotland made up 9% of the UK’s house purchase loans in Q1, bouncing back from the dip to 8% in the previous quarter.
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First-time buyers accounted for 40% of all house purchase in Scotland during Q1, up 2% on the previous quarter and 2% higher than the UK average. Despite this, first-time buyer loans fell 28% on Q4 2009 to 3900.
Scottish first-time buyer deposits averaged 23% in Q1 2010, the first time average deposits for this group have been below 25% since the end of 2008, suggesting that affordability criteria is easing slightly for this group of buyers.
Meanwhile, Scottish home movers took out 5800 loans (worth £738 million) in the first quarter, down 35% from Q4 2009, but up 23% on Q1 2009.
Home movers in Scotland put down on average a 30% deposit, unchanged from the last quarter of 2009 and 1% more than the same quarter last year.
Moreover, affordability for home movers with significant deposits is at a 14-year high, with home movers needing to commit only 9.5% of their income to cover their mortgage interest payments, down from 10% in Q4 2009.
Nevertheless, remortgage loans dropped once more, by 22% on Q4 to 7000. This was also 36% down year-on-year.
Kennedy Foster, Scotland policy consultant for the CML, said: “The pace of recovery in Scotland at first sight appears slower than in the rest of the UK, but in fact throughout the current housing cycle, market activity in Scotland has followed that of the whole of the UK very closely, but with a lag of around one quarter.”