Wednesday, 27 February 2013

First-time buyers in Scotland hits post-crunch high

The number of first-time buyers in Scotland rose to the largest annual total in four years, according to new data released today by the Council of Mortgage Lenders in Scotland.

A total of 19,000 first-time buyers purchased a property in Scotland in 2012, an increase of 13 per cent on the previous year.

Meanwhile, in the fourth quarter of last year lending to first-time buyers rose to 5,200, up by 18 per cent on the same period in 2011.

By value, loans to first-time buyers totalled £490 million in the fourth quarter, up from £460 million in the previous quarter and £400 million in the fourth quarter of 2011.

In the fourth quarter 62 per cent of first-time buyers bought a property for less than £125,000 compared to 39 per cent in the UK as a whole.

First-time buyers also borrowed less relative to their income than in the UK overall, and spent a smaller proportion of their income on mortgage payments. First-time buyers in Scotland typically borrowed 2.88 times their income, considerably lower than the 3.26 times borrowed by their counterparts in the rest of the UK.

While there was an increase in lending to first-time buyers in Scotland, there was a fall in lending to home movers in the fourth quarter for the second consecutive quarter. A total of 7,100 loans were advanced to home movers, compared to 7,300 in the third quarter and 7,200 in the same period in 2011.

Despite the slight easing in the second half of the year, there was a small increase in lending to home movers for 2012 overall. A total of 27,600 loans were advanced to home movers (worth £3.66 billion) up marginally from 27, 500 loans (worth £3.6 billion) in 2011.

As a result of the increase in first-time buyer activity but slight fall in loans to home movers, overall house purchase lending rose slightly in the fourth quarter.

Following a similar pattern to the UK overall, remortgage lending increased in the fourth quarter when £700 million was advanced – a 6 per cent increase compared to the third quarter but still 20 per cent lower than the fourth quarter in 2011.

Overall, a year-on-year fall in each quarter resulted in a 19 per cent fall in remortgage lending in 2012 compared to 2011.

Chair of CML Scotland, Iain Malloch, was reported to have commented,: “The Scottish housing market showed positive signs of recovery in 2012, broadly following the pattern seen in the rest of the UK. The availability of mortgages at more than 90 per cent loan-to-value has more than doubled in the last two years and lenders expect to offer more, high loan-to-value mortgages this year. This, and the fact that the number of first-time buyers is at a post-crunch high, suggests that lenders really are open for business.”

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