Mortgage lending growth slower in Scotland

| November 24, 2011
Mortgage lending growth slower in Scotland

Mortgage lending in Scotland rose by 8 per cent in the third quarter, with the number of loans increasing to 12,400, 900 more than in the previous quarter.

However, the rate of growth was much lower than for the UK as a whole, where mortgage lending increased by 16 per cent.

The data, from the Council of Mortgage Lenders Scotland, also revealed a 7 per cent increase in the number of loans advanced to first-time buyers in Scotland in the third quarter, to 4,600.

In terms of value, loans to first time buyers in Scotland grew 10 per cent compared with the second quarter, to £429m.

Again, this represents a significantly slower rate of growth than for the UK as a whole, where loans to first time buyers increased 13% by volume and 16% by value.

Kennedy Foster, policy consultant at CML Scotland, said: “The uncertain economic outlook and low levels of consumer confidence will likely result in a continuing constrained mortgage market in Scotland as in the UK in general.”

New figures released by the British Bankers Association (BBA) suggest that although mortgage lending is increasing, the market is still subdued, with prospective house buyers remaining cautious due to the current economic environment.

For October 2011, the BBA recorded gross mortgage lending of £8 billion, an increase of four per cent compared with October 2010.

The average value of a mortgage remained stable in October compared with the previous year, at around £145,000, but mortgage approvals were 16 per cent higher compared with the previous year.

BBA’s statistics director David Dooks said that the mortgage market “remains subdued and demand for unsecured borrowing is slow, reflecting householders’ caution in the current economic environment.”

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  1. Duncan Andrew says:

    Consumers’caution in the current economic environment is not only reflected in lower growth in mortgage lending but also characterised by many consumers paying down their credit card and bank loan debts. However, there has been much greater confidence in small sum, short term loans (often called “payday” loans)offered both on-line and from high street outlets. Many consumers appear to feel much more comfortable borrowing small sums of money over short periods to meet immediate needs or desires, rather than committing to larger, longer term debt.