Spring boost for mortgage lending

First time buyers typically pay a deposit of 25% on their new home

New data from the Council of Mortgage lenders has shown that 11,400 home loans were taken out in Scotland in the second quarter of 2009.

The figure is up 50% from the 7,600 recorded in the previous quarter, but 39% below the same time last year.

The rise in mortgage lending from April to June in Scotland was spread evenly across first-time buyers and home movers.

There were 4,300 loans to first-time buyers and 7,200 loans to home movers.

The Council of Mortgage Lenders said the picture in Scotland was similar to that in the rest of the UK although mortgages were slightly more affordable because house prices remained lower.

But there was further evidence that lending remained tight.

First-time buyers typically put down a 25% deposit in the second quarter, unchanged from the previous quarter but up from 13% a year earlier.

Those taking their first steps on the housing ladder typically borrowed 2.85 times their income.

Home movers typically borrowed 2.55 times their income (2.73 across the UK).

Falling payments

Lower interest rates and house prices have meant homeowners are spending much less repaying their mortgage than in previous years.

Scottish first-time buyers typically spent 14.1% of their income on mortgage interest payments (compared with 15% across the UK), the lowest share since the first quarter of 2006.

Interest payments typically consumed 11.1% of Scottish home movers' income (compared with 11.3% across the UK), the lowest share since the second quarter of 2004.

A spokesman for the Council of Mortgage Lenders in Scotland said the figures showed that lending in the mortgage market was beginning to stabilise which was encouraging.

Kennedy Foster also warned: "It will be a slow path to full recovery with significant obstacles presented by the restricted access to mortgage funding, fewer active mortgage lenders in the market, rising unemployment and limited consumer demand".

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