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First time buyer lending down 3% on third quarter but up 5% on year before, says CML

The home buying market in Scotland is in somewhat better health than its English counterpart, suggested the most recent figures from the Council of Mortgage Lenders (CML), despite reporting quarterly and yearly dips in lending.

In the fourth quarter, home buyers borrowed £2.2bn for house purchases, down 0.5% quarter-on-quarter and 3% year-on-year. They took out 16,800 loans, which is down 1% compared to the previous quarter and 3% on the fourth quarter of 2015.

Furthermore, in the fourth quarter, the CML said:

  • First-time buyers borrowed £910 million, down 3% on the third quarter but up 5% on the fourth quarter last year. This totalled 8,400 loans, down 2% quarter-on-quarter but up 5% year-on-year
  • Home movers borrowed £1.3bn, up 1% quarter-on-quarter but down 7% compared to a year ago. This totalled 8,400 loans, unchanged quarter-on-quarter but down 10% compared to the same quarter in 2015
  • Remortgage activity totalled £870 million, down 2% on the third quarter but up 10% on the same quarter last year. This came to 7,200 loans, down 1% quarter-on-quarter but up 7% compared to a year ago

For 2016 as a whole, the CML said:

  • Home buyers borrowed £8.3bn for house purchase, down 3% on 2015. They took out 63,500 loans, down 2% compared to the year before
  • First-time buyers borrowed £3.4bn, up 5% on the previous year. This totalled 31,400 loans, up 5% on 2015
  • Home movers borrowed £4.9bn, totalling 32,100 loans, down 7% by value and 8% by volume on 2015
  • Remortgage activity totalled £3.4bn, up 10% on 2015. This came to 27,900 loans, up 6% in 2015

“First-time buyer lending continues to show healthy annual growth in Scotland. Overall, the picture is of a steady market, with affordability comparing favourably with the UK as a whole,” said Carol Anderson, CML Scotland’s chair.

First-time buyers in Scotland typically borrowed £99,800 (£135,000 in the UK overall), almost unchanged from the £100,000 average the previous quarter. The average household income was £33,500 (£40,200 in the UK overall), down from £33,700. The typical income multiple in Scotland of 3.03 (3.02 in the previous quarter) also compared favourably to the UK average of 3.56.

Affordability metrics for home movers saw the typical amount borrowed this quarter was £140,000 (£172,500 in the UK overall), up from £135,300 the previous quarter. The average household income of a home mover was £50,700 (£54,900 in the UK overall), down from £51,000. This meant the typical home mover income multiple in Scotland was 2.80, up 2.76 from the previous quarter and the UK average of 3.29.

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