Warning over slump in mortgage lending

HOUSING market experts have warned of a fresh Scottish mortgage slump despite new figures showing an increase in lending in the three months to the end of June.

There were 12,700 loans for houses purchased in Scotland in the second quarter, up from 9,800 in the preceding three months and 11,500 in the same period last year, the Council of Mortgage Lenders (CML) said yesterday.

The increase outstripped that for the UK as a whole, but came on the back of low lending levels in the first three months of the year. First-time buyers took out 4,700 loans, an 18 per cent rise on the previous quarter and up 9 per cent on quarter two 2009.

The CML also revealed that home movers in Scotland needed to spend less of their income on mortgage interest than anywhere else in the UK during the second quarter.

Kennedy Foster, policy consultant at CML Scotland, said that, while he was encouraged by the lending rise, the hard times were not over. He added: "Regulatory and funding pressures will affect Scotland as much as the rest of the UK and the upward trend we have seen in the second quarter may not continue."

Jonathan Fair, chief executive of Homes for Scotland, warned that mortgage market proposals set out by the Financial Services Authority (FSA) would threaten any lending recovery. He said: "FSA proposals to tighten regulation would have a massive impact on people's ability to secure a mortgage."