First time buyers are driving the property market in Scotland with more loans advance to them in the third quarter of 2016 than any quarter since 2007.
The latest data from the Council of Mortgage Lenders (CML) shows that overall home buyers borrowed £2.2 billion for house purchase, up 5% quarter on quarter but down 5% year on year. They took out 17,100 loans, up 5% on the previous quarter but down 4% compared to the third quarter 2015.
But the first time buyer borrowing sector is more buoyant. They borrowed £940 million, up 3% on the second quarter and 6% on the third quarter last year. This equated to 8,600 loans, up 4% quarter on quarter and 5% year on year.
Home movers borrowed £1.3 billion, up 6% quarter on quarter but down 11% compared to a year ago. This totalled 8,500 loans, up 6% quarter on quarter but down 12% year on year.
Remortgage activity totalled £890 million, up 6% on the previous quarter and 11% on the same quarter in 2015. This came to 7,300 loans, up 4% quarter on quarter and 11% year on year.
‘First time buyers continue to be a key driver in the market with more loans advanced to new home-owners than any quarter since 2007. This quarter also saw a four year high in remortgage activity and quarter on quarter growth in home movers so all lending types have performed strongly over the summer months,’ said Carol Anderson, chair of CML Scotland.
‘This is the first quarter post the European Union referendum and the market appears resilient so far. It may take time to fully gauge the full impact but currently the Scotland market is in good shape and open for business moving forward,’ she added.
An analysis of the figures reveal that there were more loans advanced to first time buyers in this quarter in Scotland than any other since the third quarter of 2007. First time buyers also borrowed more this quarter than any other quarter since CML records began.
The CML report says that affordability metrics for first time buyers in Scotland remain better than for the UK overall. The typical amount borrowed in the third quarter remained unchanged from the previous quarter at £100,000 compared to £134,900 in the UK overall.
The typical average household income of a first time buyers increased slightly from £33,600 to £33,700 compared to £40,500 in the UK overall. This meant the income multiple in Scotland was 3.02 a slight decrease compared to 3.03 the previous quarter and lower than the UK average of 3.54.
Affordability metrics for home movers in Scotland similarly remain better than for the UK overall. The amount borrowed this quarter was £135,300 compared to £172,800 in the UK overall, down from £139,500 the previous quarter.
The typical average household income of a home mover was £51,000 compared to £55,200 in the UK overall, up from £49,700. This meant the income multiple in Scotland was 2.76, down compared to 2.84 the previous quarter and lower than the UK average of 3.27.
