Fall in house purchase loans in Scotland
- Thursday, May 27, 2010, 12:15
- 1 comment
New figures from the Council of Mortgage Lenders show that the number of house purchase loans in Scotland during Q1 2010 matched the rest of the UK by falling.
Such loans fell by 33% in Scotland, from 14,400 (worth £1.6 billion in the last three months of 2009) to 9,700 (worth £1.1 billion in the first three months of 2010), perhaps reflecting the fact that many consumers brought forward their home purchases to take advantage of the stamp duty holiday on properties valued under £175,000 before it ended in December last year.
However, the number of house purchase loans in Q1 2010 was still higher than the number made in Q1 2009, with Scotland’s share of UK house purchases rising from Q4 2009.
Similar statistics are reflected in loans made to first-time buyers: there was a fall from last quarter, but an increase from twelve months ago. First-time buyers now account for 40% of the house purchasing market in Scotland.
The remortgage market also dropped in Q1 2010 compared to the previous quarter, with a 22% fall being recorded, and a year on year fall of 36% being recorded.
Kennedy Foster, Scotland Policy Consultant, Council of Mortgage Lenders, said:
“The pace of recovery in Scotland at first sight appears slower than in the rest of the UK, but in fact throughout the current housing cycle, market activity in Scotland has followed that of the whole of the UK very closely, but with a lag of around one quarter.
“As in the rest of the UK though, the low level of house sales seen in the first three months of 2010 can be attributed to two events. The end of the last stamp duty holiday in December 2009 will have caused a drop in house sales at the start of the year and the severe winter weather seen in Scotland in January and February will have adversely impacted on the market.”
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There is some truth in that argument that the penny pinchers bought to save tax, but perhaps a more prolific reason is that we are experiencing the biggest financial crisis since WW2! It is not over until the fat lady sings. There are political problems in the Euro region, debt on an unprecedented scale across the West, shock waves in the currency markets, shock waves in stocks, deflation and soon possibly hyper inflation. That means when the Far East bubble bursts there is little growth across the globe and inflation eating away the savers and pensions hard earned cash. The working people will bear the brunt of this and feel real pain for a decade. Renting is by far a better option, re-location to a cheaper commutable area must be atleast considered with due dilligence. So what does the next two years look like?This means unrest across Europe wide, higher taxes, higher unemployment and unhappy citizens. Medi care and education will dwindle further too. Lenders are making matters worse with little credit being made available exacerbating the problem. We should look at this in perspective, take a step back weigh up the situation, if they are not lending there is a reason, they are concealing the truth. Take a look at the latest CML affordability chart and count to ten, consider what the future holds and sit it out. Catch the rise once the dust has settled and the contagion has been dispersed. Better to be safe than sorry!