Scotland sees strongest first quarter for home lending since 2008

Scotland sees strongest first quarter for home lending since 2008
31/05/2016 , by , in INTERNATIONAL

Home lending in Scotland increased by 7% in the first quarter of 2016, the strongest first three months of a year since 2008, new figures show.
A breakdown of the data from the Council of Mortgage Lenders shows that on an unadjusted basis home owners borrowed £1.8 billion, down 22% quarter on quarter but up 1% year on year. They took out 13,500 loans, down 22% on the previous quarter but up 7% compared to the first quarter 2015.

First time buyers borrowed £660 million, down 24% on the fourth quarter 2015 but up 10% on the first quarter last year. This totalled 6,200 loans, down 23% quarter on quarter but up 11% year on year.

Home movers borrowed £1.1 billion, down 21% quarter on quarter and down 4% compared to a year ago. This totalled 7,300 loans, down 22% quarter on quarter but up 4% on the first quarter of 2015.

Remortgage activity totalled £780 million, down 1% on the fourth quarter 2015 but up 13% compared to a year ago. This came to 6,400 loans, down 5% quarter on quarter but 5% up compared to a year ago.

‘Seasonal factors often affect lending levels in the first quarter of the year, but there are encouraging indicators in Scotland, as all lending types showed growth year on year,’ said Carol Anderson, CML Scotland chair.

She pointed out that 2016 saw the strongest first quarter in a year for house purchase lending since 200. ‘With affordability conditions continuing to be favourable, we would expect gradual year on year growth in Scotland to continue throughout 2016,’ she added.

While the figures show that it was the highest total borrowed for house purchases in the first quarter of a year since 2010 in Scotland, it was also the highest total borrowed for remortgage in the first period of a year since 2011.

The CML report says that this was mainly driven by home movers who took out the highest amount of loans for house purchase in a first quarter of the year since the first quarter of 2008.

Affordability metrics for first time buyers in Scotland remains better than for the UK overall. The amount borrowed this quarter compared to the previous was £97,795 compared to £130,500 in the UK overall, from £100,000.

The average household income of a first time buyers was £33,381 compared to £40,000 in the UK overall, from £34,066 meaning income multiple in Scotland was 2.97 down compared to 3.01 the previous quarter and the UK average of 3.46.

“Affordability metrics for home movers in Scotland also remains better than for the UK overall. The amount borrowed this quarter was £136,000 compared to £172,295 in the UK overall, from £135,789 the previous quarter,” reported by propertywire.

The average household income of a home mover was £51,149 compared to £56,104 in the UK overall, from £50,815 meaning income multiple in Scotland was 2.68 down compared to 2.73 the previous quarter and the UK average of 3.2.

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