Scotland’s new mortgage lending falls by 18%

The Council of Mortgage Lenders (CML) Scotland has reported that loans for house purchases fell to 15,100 in the three months to the end of September.

Scotland still continues to support the highest regional share of new UK house purchase lending but the figure represents an 18% decline on the previous quarter and is in line with a similar third-quarter fall across the whole of the UK.

The region also saw a fall in its average loan-to-value ratio, down to 75%, from 77% during the previous three months.

In addition, the average income multiple fell to 2.78 times income in the third quarter, from 2.88 in the second quarter of 2008.

During the three months to the end of September, Scottish first-time buyers took out 5,300 loans worth a collective £481 million but the figures are down on the previous quarter from 6,600 for volume and £622 million for value.

Remortgaging also fell, to 18,000 loans worth £1.9 billion and CML Scotland expects remortgaging to remain subdued because borrowers coming to the end of fixed-rate deals are likely to revert to lenders’ variable rates, many of which currently provide a more attractive deal than a fix.

CML Scotland’s policy consultant, Kennedy Foster, comments that the year-on-year decline in house purchase lending has been less pronounced in Scotland that in the rest of the UK.

While he is hopeful that the recommendations of the Crosby report will be implemented swiftly to restore lending Mr Foster expects consumer demand for loans to continue to fall away as the economy weakens.

CML Scotland’s members represent 21 mortgage lenders across the region.

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