Property boom for first-time buyers in Scotland

The mortgage market has shown strong growth in Scotland, with first-time buyers and remortgaging levels at their highest for a decade, new figures have revealed.

Paul Hilton, CEO of ESPC

Property experts said that a relaxation in the availability of mortgages for first time buyers had made it easier for people to get on the property ladder.

The report, from UK Finance, the finance and banking industry trade body, showed there were 8,800 new first-time buyer mortgages completed in Scotland in the fourth quarter of 2017, 3.5 per cent more than in the same quarter of the previous year. The value of loans to first time buyers - who are typically 29 years old and have an income of £35,000 - rocketed even higher, up almost ten per cent to £1.01 billion.

The average loan to a first time buyer in the last quarter of last year reached £106,000, around 85 per cent of the typical home value - 3.13 times the average salary.

Meanwhile, a total of 9,100 new home mover mortgages were completed in the same period - 8.3 per cent higher than the same period in 2016.

However, home movers tend to have an average age of 39 - and a much higher salary of £51,000. The typical property for home movers is worth just 2.86 times their salary.

Paul Hilton, chief executive of SPC Scotland, which represents property solicitors across the country, said: “The good news for first time buyers is that with more mortgage options available, it is increasingly possible to find one that is suited to their needs and affordability.

“With 95 per cent mortgages available, this means that there is also less demand on the amount of deposit required to buy a property. With the 2017/18 Scottish Government budget introducing a tax relief for first time buyers on properties worth £175,000 or less, we hope this means that owning a home is not just a dream but a reality for first time buyers.”

Carol Anderson, chair of UK Finance’s Scotland Mortgage Committee, said: “The mortgage market has shown strong growth in Scotland, with first-time buyers and remortgaging levels at their highest for a decade.

“Remortgaging has also risen by a fifth compared to the same period in 2016, which demonstrates homeowners are shopping around.”

The data also showed that a total of 8,600 Scottish homeowners remortgaged their property in the fourth quarter, some 17.8 per cent more than in the same period in 2016. The £1.05bn of remortgaging in the fourth quarter was 18 per cent higher year-on-year.

The Scottish figures were a contrast to UK Finance’s data for London, where growth in the number of first time buyers remained flat. Meanwhile, Wales and Northern Ireland showed similar levels of growth to Scotland.
UK Finance was formed last year to represent around 300 firms in the UK the finance and banking industry. It brings together most of the activities previously carried out by organisations including the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.

Last week, separate research from the Institute of Fiscal Studies found that young adults are far less likely to own a home than ever before, with the decline in property ownership found to be most significant amongst young individuals aged between 25 and 34.