In the third quarter of the year there were 7,500 first time buyer loans in Scotland, 1% down on the previous quarter, but 15% up on the same period in 2013.
First time buyers in the period borrowed £810 million, up 1% on the previous quarter and 23% on the third quarter of 2013. This was the highest quarterly total lending value since the middle of 2008.
At 8,900 loans, there were 2% more home mover loans in the third quarter than the second, and 7% more than in the same period of 2013. The value of home mover lending was £1.3 billion, up 4% on the second quarter and 12% up on the third quarter 2013.
Remortgage lending in the quarter increased in Scotland compared to the previous quarter but declined compared to the same quarter in 2013.
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 £810 million, and was second in total number of loans only to the previous quarter with 7,500 loans.
The data also shows that 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 £1.3 billion. 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 the third quarter of 2013.
‘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,’ said Linda Docherty, chair of CML Scotland.
‘As of April next year, the new land and buildings transaction tax (LBTT) will be introduced in Scotland, replacing stamp duty, the first time tax rates will differ on residential properties from the rest of the UK. Following the recent announcement of the new tax rates, it will be interesting to see what impact this has on the level of housing transactions in the lead up to the introduction of the new tax system,’ she added.
