Scottish housing market more buoyant than rest of UK

Permalink: Scottish housing market more buoyant than rest of UK
by Lin Freestone

The recently released figures from the Council of Mortgage Lenders reveal that the credit crunch is having less of an impact on the Scottish housing market.

Scotland’s share of all mortgage loans in the UK rose to 11% in the first quarter of the year, from 8% a year ago.

Remortgaging in Scotland is stronger than lending for house purchase. In the first quarter of 2008 there were 20,000 remortgage loans, compared with 21,000 in the first quarter of 2007.

However, remortgaging remains strong across the UK as a whole as large numbers of borrowers are changing from fixed-rate mortgages.

There seems to be several reasons why the situation in Scotland is easier, mainly that the average house price is 25% lower than the UK average.

The tightening in lending criteria has had less of an affect north of the border as the average house price in Scotland is £163,000, compared with the UK average of £218,521. Borrowers typically request smaller loans.

The average purchaser in Scotland borrowed 2.87 times their income in the first quarter of 2008, compared with 3.14 in the UK. Mortgage payments take 16.9% of an average Scottish borrower’s income, compared with 18.5% in the UK.

It is suggested that the comparatively more affordable state of the Scottish market may continue to cushion the credit crunch impact, although a slowdown to some extent is expected.