More first-timers are getting on the Scots housing ladder

The Council of Mortgage Lenders (CML) yesterday reported an increase of a fifth in the number of loans given to first-time buyers in Scotland in the three months to the end of June.

But the number of loans to first-timers in Scotland was still less than half the level for the same quarter five years ago and remained significantly down on the equivalent 2008 figure.

And a report out today shows that conditions for homeowners looking to take their second step on the housing ladder are even harder than those facing first-time buyers.

A combination of lower house prices and higher deposit requirements has made it harder for second-steppers to move home than at any time in the past 25 years, according to Bank of Scotland.

The report comes a day after the CML revealed that the number of mortgages advanced to first-time buyers in Scotland hit its highest level in almost two years in the last quarter.

Scottish first-time buyers took out 4,800 loans worth £450 million, the CML’s figures show. The number was up 20 per cent on the first three months of the year, contrasting with a 3 per cent drop across the UK as a whole.

The average first-time buyer in Scotland in the last quarter was 28 years old and put down a deposit of 20 per cent, said the CML. Their capital interest payments accounted for 17.8 per cent of their income.

Home movers in Scotland borrowed £1.01 billion in the three months to the end of June. The 7,600 loans represented a 36 per cent hike on the first three months of 2012 and was up 6 per cent on the same period last year. But fewer Scots remortgaged in the spring months, despite a series of standard variable rate mortgage increases over that period.

Iain Malloch, chair of CML Scotland, said the latest figures were a source of encouragement for the Scottish housing market.

“An increase in overall home lending in contrast to the rest of the UK is encouraging, and the Scottish government is working with the building and lending industries on a forthcoming scheme to enable people to access higher loan-to-value mortgages on new build properties,” he said. “We still expect to see challenging conditions in the housing market in Scotland but we hope to see an easing of constraints throughout the rest of 2012 and beyond.”

But the outlook is less rosy for those in their first home and hoping to make their next move, according to the latest Bank of Scotland Homemovers review, published today. It reveals that affordability for second-steppers is even less favourable than for first-time buyers, following wage stagnation, house price falls and tightened mortgage criteria.

The average price paid by a first-time buyer has dropped by 15 per cent in the last four years alone.

The equity that the average second-stepper has in their home would cover just 6 per cent of the price of the typical second home. In 2007, when the market was at its peak, it would have accounted for 40 per cent.

Nitesh Patel, housing economist at Bank of Scotland, said: “The problems facing second steppers create a bottleneck that significantly limits the number of homes available to first-time buyers.”