House purchase lending in Scotland in the first quarter of 2011 was at its lowest for two years while remortgaging increased due to interest rate rise concerns.
Some 8,000 loans worth £888m in total were taken out for house purchase in the first quarter in Scotland. This was a fall of 27% by volume and 29% by value compared to the previous quarter and 19% lower by volume and value when compared to the same period in 2010.
First-time buyers made up 40% of house purchase loans advanced in Scotland up from 35% in the previous quarter. The proportion is slightly higher than the UK as a whole where first-time buyers increased from 36% to 37% in the first quarter.
Despite the increased proportion of house purchase loans advanced to first-time buyers, the overall volume and value of loans to both first-time buyers and home movers fell in the first quarter in Scotland. Compared to the first quarter of 2010, loans to first-time buyers fell by 18% in volume and 21% in value while lending to home movers fell by 31% in volume and 33% in value.
Remortgaging picked up in Scotland along with the rest of the UK in the first quarter. There were 8,800 loans taken out for remortgage worth £900
Kennedy Foster, policy consultant for CML Scotland, said: “The picture for Scotland looks very similar to that of the rest of the UK with subdued house purchase lending and a resurgence in remortgaging. We expect remortgage activity to grow throughout the UK further in the next quarter as recent expectations of a rise in base rate, although unfounded, led to an increase in remortgage approvals in the first quarter.”
