First-time buyers in Scotland typically borrowed 79% of their property’s value in the final quarter of the year, compared to 80% for the UK as a whole.
The number of first-time buyers in Scotland in the final quarter fell 4% to 4,500, down from 4,700 in the third quarter, but up from 4,200 in the fourth quarter of 2010. By value, first-time buyers in Scotland borrowed £410 million in the last quarter, a decrease from £440 million in the third quarter but an increase from £370 million a year earlier.
The number of loans to Scottish home movers dropped 10% to 7,200 in the last quarter of the year, from 8,000 in the third quarter of 2011 and from 7,500 in the last quarter of 2010. By value, they borrowed £950 million in the fourth quarter of 2011, down from just over £1 billion in the previous quarter and £970 million in the fourth quarter of 2010.
The average Scottish home mover borrowed more of their property’s value in the last quarter (72%) than seen since the final quarter of 2008. This compares to the 70% seen in the UK as a whole.
Overall, there were 11,700 loans worth nearly £1.4 billion taken out for house purchase in Scotland in the final quarter of 2011, down 8% by volume and value on the third quarter and down 1% by volume but up 1% by value on the last quarter of 2010. The UK as a whole fared slightly better than Scotland.
The number of loans for house purchase decreased by 5% from the third quarter but increased by 1% from the last quarter of the previous year.
For remortgage, 9,100 loans, worth £870 million, were advanced in Scotland, a drop of 6% by both volume and value from the previous quarter but a rise of 15% by volume (14% by value) from the last quarter of 2010.
By contrast, remortgaging in the UK fared slightly worse. The number of loans taken out declined 9% from the third quarter but grew 8% from the previous year.
Over 2011 as a whole, Scotland accounted for 9% of the total UK house purchase market and 10% of all UK remortgaging.
The number of house purchase loans in Scotland declined 7% to 44,500 in 2011 but remortgaging increased by 18% to 36,900 loans.
Jim Dunn, chair of CML Scotland, commented:
“Scotland, as well as the rest of the UK, continues to see a constrained mortgage market. However, it is encouraging to see positive signs, such as better affordability for first-time buyers and a decrease in average deposits for home movers, emerging.
“2012 will still be a challenging year but we hope to see the slight easing of constraints continuing throughout the year.”
Mark Dyason of independent mortgage broker, Edinburgh Mortgage Advice, said:
"First time buyers are not only being supported by lower house prices but, more fundamentally, are not over-stretching themselves. In the current economic climate, the new generation is being as cautious as the old, which is no bad thing.
"The final quarter of 2011 may have been flat but the Scottish mortgage market has seen a boost since the New Year due to the stamp duty holiday. Were this holiday not coming to an end, I would expect the market to be much flatter.
"The growth in the number of remortgages over 2011 has been down to some of the exceptionally competitive fixed and tracker rates that have come onto the market. They have tempted people off their SVRs.
"We are already seeing rates tick upwards, in no small part due to the ongoing problems in the Eurozone. Lenders are becoming more nervous by the day and this is feeding through into mortgage rates.
"Compared to this time last year, there is more demand for mortgages but the landscape remains fragmented. Desirable properties in sought-after areas can attract a lot of bids and sell very quickly. Undifferentiated properties in less desirable areas can languish on the market for quite some time.
"More established homeowners are leaning towards 5-year fixes, where the equity they have means they are paying little more than tracker rates anyway. Many people are continuing to sit on their hands, scared of what might happen if they change their circumstances."
