Home Loans In Scotland Suffer 20 Per Cent Fall

Wed, 04 Jun 2008

The number of home loan applications in Scotland has dropped by 20 per cent, according to new data from the Council of Mortgage Lenders (CML).

The first in-depth report on Scotland’s housing market by the CML has revealed that there were 16,000 loans for house purchase agreed in the three months to April, down from 20,000 in the same period the previous year.

However, the report shows that the Scottish housing market is weathering the credit storm better than the rest of the UK, where home loans suffered a 40 per cent fall over the same period, as house prices remain 25 per cent lower than the UK average.

The CML also found that the average borrower in Scotland borrowed 2.87 times their income in the first quarter of this year, compared with a 3.14 average for the rest of Britain .

Mortgage repayments accounted for 16.9 per cent of the average Scottish borrower's income, against a UK average of 18.5 per cent.

Kennedy Foster, policy consultant for CML Scotland, said: "The Scottish market is holding up better than that in the rest of the UK ."

"To date there has been less of an impact in Scotland than the rest of the UK as the affordability is better here, meaning borrowers have been less affected by the tightening in lending criteria."

But Mr Foster warned that the shortage of mortgage funding is likely to get worse in the coming months and added that any pick-up in the market is not likely to occur until 2009.
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