While Scotland has been having a slightly rough ride, a recent surge of activity is a good portent for the future
The mortgage market took longer than expected to emerge from its winter hibernation this year but it now looks to be in full flow. This is no more so than in Scotland, where a huge surge in activity has been witnessed in the second quarter.
It has been a slightly rough ride in Scotland until recently, with three consecutive quarters of decline since the summer of 2014. However, this all changed in the past quarter thanks to much higher growth in house purchase lending activity than in the UK overall. It has now reached a seven-year quarterly high with loans 39 per cent up on Q1 by volume and up 28 per cent by value.
This is an encouraging rebound out of a relative rut and the situation is looking positive. First-time buyers are taking out loans at 81 per cent of the size of the UK average and at a lower income multiple, while competitive mortgage deals have seen remortgage activity bounce back from its relatively stagnant levels. What is more, Scotland is not seeing the levels of house price inflation that exacerbate the affordability constraints on new borrowers in some English regions. While UK prices rose by 6 per cent in the year, prices went down by 1 per cent in Scotland, according to figures from the Office for National Statistics.
With the political uncertainty of the independence vote left behind for now, the Scottish market can move forward with a level of stability. Would-be homeowners in Scotland can also take advantage of a new taxation system that benefits the majority of borrowers and the prospect of an injection of £195m over the next three years for a new Help to Buy successor scheme. Conditions look good for increased activity towards the end of this year and into 2016.
Paul Smee is director general of the Council of Mortgage Lenders