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Scottish mortgage market update

The mortgage market in Scotland started 2011 in a similar position to the UK as a whole, according to data released by the Council of Mortgage Lenders Scotland. House purchase lending was at its lowest for two years and remortgaging increased due to interest rate rise concerns.

8,000 loans, worth £888 million, were taken out for house purchase in the first quarter of 2011 in Scotland, a 27% fall by number (29% by value) compared the previous quarter and 19% lower (by volume and value) than the first quarter of 2010.

40% of house purchase loans advanced in Scotland in the first three months of the year were to first-time buyers, 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.

Lending criteria in the first quarter were similar to the last three months of 2010. First-time buyers borrowed on average 77% of their property’s value, up from 76% but below the 79% average for the UK as a whole. They typically borrowed 2.85 their income (2.86 in the previous three months) which was below the 3.15 seen UK-wide. Home movers borrowed 70% of their property’s value, unchanged from the last quarter of 2010, and more than the UK as a whole at 68%. Their interest payments consumed on average 9.1% of their income, virtually identical to 9.0% in the previous quarter but lower than the UK as a whole.