Housing market: 'Other lenders should follow the lead of RBS'

ALTHOUGH the state of the housing market will continue to be of some concern to home-owners and would-be borrowers, some comfort is to be taken from figures obtained by the Evening News yesterday which appear to show that the Lothians seem to be weathering the worst of the storm.

Despite values tumbling in some parts of the country by more than 20 per cent, the value of the average home in the Lothians has gone down by just over 2.5 per cent in the past year. Although the number of homes sold last month has fallen dramatically, those put on the market are taking an average of seven days longer to sell than 12 months ago.

What is more significant is the manner in which the Scottish market is rapidly changing. It is now very much a buyer's market rather than a seller's. Up until a few years ago almost three quarters of the homes put up for sale in the Capital were "offers over" and buyers could expect to pay at least 20 per cent over the asking price to secure more desirable properties.

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Now three out of four homes are being offered at a fixed price – but 80 per cent of sellers are not even achieving this and are being forced to take less, putting Scotland far more in line with the system that is common throughout the rest of the UK.

The slowdown in the number of properties being offered for sale reflects the continuing caution being exercised by both borrowers and banks. New figures show only one in ten lenders has so far announced plans to pass on the latest interest rate cut to their variable rate mortgage customers a week after the Bank of England base rate was slashed to a new record low of 0.5 per cent.

Meanwhile, the Council of Mortgage Lenders reports a typical first-time buyer put down a deposit of 24 per cent in January, the highest level on record. For many keen to get a first step on the ladder, that is not affordable.

The news that the Royal Bank of Scotland is to make 1.7 billion-worth of mortgages available to Scottish homebuyers this year is a welcome step forward – particularly its commitment to continue to offer first-time buyers loans of up to 90 per cent.

Its pledge to release further funds to help reinvigorate Scotland's housing market if customer demand dictates is also a positive move.

If the markets are to remain buoyant then other lenders, who have also received massive bail-outs of public money to keep them afloat, should follow its lead and go someway to repaying part of the debt they owe.