House purchase lending to home-buyers increased quarter-on-quarter in Scotland totalling 16,400 loans, up 1% compared to the second quarter and the value of these loans totalled £2.1 billion, a rise of 3% on the second quarter. Compared to the third quarter of 2013, the number of loans increased by 11% and the value of lending by 16%. This was the highest quarterly volume and value of house purchase lending in Scotland since the second quarter of 2008.
First-time buyers borrowed more in this quarter than in any other since 2007 totalling £810m, and was second in total number of loans only to the previous quarter with 7,500 loans. First-time buyer affordability may have been a factor in this, with first-time buyers typically borrowing 2.94 times their gross income, less than the 2.98 income multiple in the second quarter and less than the UK average of 3.41.
The typical loan size for first-time buyers was £98,307 in the third quarter, up from £95,000 in the previous quarter. The typical gross income of a first-time buyer household was £33,516 compared to £32,273 in the second quarter.
The relatively low level of interest rates saw first-time buyers' payment burden remaining relatively low in the third quarter at 17.3% of gross income being spent to cover capital and interest payments, higher than 16.7% in the second quarter but a smaller proportion of income than the 19.6% UK average.
Home movers borrowed more this quarter than any other quarter since the second quarter of 2008 totalling £1.3bn. Home mover affordability changed fractionally, with home movers typically borrowing 2.62 times their gross income compared 2.69 in the second quarter and to 3.05 for the UK overall.
The typical loan size for home movers was £130,000 in third quarter, up from £128,800 in the previous quarter. The typical gross household income of a home mover was £51,011 in third quarter compared to £49,151 in second quarter.
Home movers' payment burden remained relatively low in Scotland at 16.9% of gross income being spent to cover monthly capital and interest payments, slightly more than the 16.6% in the second quarter but less than the 18.8% UK average.
Remortgage lending in Scotland grew back to levels seen in the first quarter of 2014 after a decline in lending was seen in the second quarter, however there was a substantial year-on-year decline in remortgage lending. Home-owner remortgage lending totalled 6,100 loans in the period, which was an increase of 7% on the second quarter but down 21% on the third quarter 2013. These loans totalled £670m in value, an increase of 5% quarter-on-quarter but down 16% compared to Q3 2013.
Linda Docherty, chair of CML Scotland, commented:
“The past two quarters have seen the highest house purchase lending levels in Scotland since 2008, suggesting the market has remained robust over the past six months, despite the new FCA mortgage market rules introduced in April. The surge in first-time buyer lending has been one of the stories of Scotland's economic recovery."
