Number of new mortgages in Scotland up 24 per cent last year

  • Rise in mortgage demand fuelled by appetite to buy homes with more space, and the Land and Buildings Transaction Tax (LBTT) holiday
  • There was a 22 per cent increase in first time buyer mortgages, and a 27 per cent increase in mortgages for people moving home in 2021 compared to 2020
  • The loan-to-income (LTI) ratio for all homebuyers hit its highest level in 2021

Demand for homes with more space during the pandemic helped drive a 24 per cent increase in new mortgages in Scotland in 2021. Figures from UK Finance show that there were 70,190 new mortgages approved during 2021, up from 56,450 in 2020.

The total overall new mortgage figure is made up of first-time buyer mortgages and homemover mortgages:

  • First-time buyer mortgages were up 22 per cent to 35,100 (2020: 28,740). This is also up from the pre-pandemic level of 32,630 in 2019.
  • Homemover mortgages were up 27 per cent to 35,090 (2020: 27,710). This is also up from the pre-pandemic level of 33,620 in 2019.

At the same time, the loan-to-income (LTI) ratio for homebuyers hit its highest level, reflecting the strong growth in house prices.

The LTI ratio is the number of times greater the amount a mortgage is compared to the total income of the borrower. For first-time buyers in Scotland this reached 3.24 in the final quarter of last year, while it was 2.97 for homemovers.

This is compared to an average LTI of 3.59 and 3.37 for first-time buyers and homemovers respectively across the whole of the UK.

Lee Hopley, Director of Economic Insight and Research, said: “Appetite to buy or move home was up last year with demand boosted from the LBTT holiday and changing housing needs from the pandemic.

“The increase last year follows suppressed activity in 2020 at the start of the pandemic, but it’s notable that homebuying numbers in 2021 also exceeded those in 2019.

“We expect to see a return to a more stable mortgage market this year with continued appetite to buy property; however, the pressure on real incomes from rising inflation is likely to bear down on effective demand.”

First Home Fund pilot success

First-time buyers have less than a week to apply for the pilot First Home Fund, which has helped thousands to enter the property market.

The new scheme has been particularly popular since the housing market reopened in June, and is expected to support more than 8,000 households into home ownership by the end of the financial year.

Homebuyers who are completing purchases this financial year have until 6pm on 2 October to apply.

The fund, which offers first-time buyers loans of up to £25,000 for their deposit, was launched in December 2019 to pilot a new approach to supporting first-time buyers. The pilot will now be evaluated, with the results expected to be published in January.

However, recognising its early success, the Scottish Government intends to reopen for applications in the new year for home purchases completing in 2021/22.

Housing Minister Kevin Stewart said: “The pilot of our First Home Fund has been a huge success, helping thousands of people own their first home.

“The fund has been especially important since property sales resumed over the summer, and we invested a further £50 million in July to help ensure that first-time buyers could still access the market despite changes to mortgages caused by the coronavirus (COVID-19) pandemic.

“While the scheme is almost fully subscribed for 2020-21, I am pleased to say that I will reopen the pilot for the next financial year, and look forward to announcing further details of this in due course.

“In the meantime, first-time buyers will still be able to access shared equity schemes including Help to Buy (Scotland) and LIFT (the Low-cost Initiative for First Time Buyers), and I would encourage them to consider these options.”

Cameron McKenzie, who bought a two-bedroom flat in Pilton through the fund, said: “Thanks to the First Home Fund we bought our first home far earlier than we ever imagined, especially during these uncertain times! The application process was easy to understand and Link staff were very helpful.”

The First Home Fund was launched with an initial budget of £150 million. The Scottish Government invested a further £50 million in July in response to reduced availability of higher loan-to-value mortgages caused by the COVID-19 crisis.

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First Minister confirms £70 million for first time buyers

OMSE scheme means ‘ome, sweet ‘ome’ for Scots first timers!

sturgeon new homes

£70 million will be invested in a scheme to help eligible first-time buyers on low to moderate incomes buy a home, First Minister Nicola Sturgeon confirmed today.

The Scottish Government’s Open Market Shared Equity Scheme (OMSE) provides assistance to eligible buyers in the form of an interest free loan.

Eligible buyers are normally required to purchase between 60 per cent and 90 per cent of the value of a home within certain price thresholds that is for sale on the open market.

During a visit to Alloa The First Minister and Social Justice Secretary Alex Neil visited the home of Craig and Jude Deacons who purchased a home with assistance from the scheme.

Ms Sturgeon said: “”We want to help today’s generation of young people to access home ownership where this is sensible and sustainable for them.

“This scheme will have a huge impact on people’s life chances and will help them make a move from living in the social rented sector, the private rented sector or residing in the family home.’

“We will do all we can, within our powers and our resources, to help people like Craig and Jude get a foot onto the housing ladder”.

Jude Deacons said: ““Craig and I are grateful for the scheme as it has allowed us to secure a great first home fit for our family life.

“We got married in 2009 just as the housing market changed significantly. We were unable to buy our first home as we had no way of securing the sizeable deposit required, despite both being in full time employment.

“As both of us were first time buyers the OMSE scheme allowed us to purchase a house fit for purpose to accommodate our two children.

“Another benefit to the OMSE scheme was that we could look at all homes and not just new builds. This opened up more choice with regards to purchasing the right home for us.”

Social Justice Secretary Alex Neil said: ““The Open Market Shared Equity scheme has not only helped people to buy their first home, it has also helped ‘second-steppers’ to be able to sell their home and to move to a new property.

“The scheme has also helped free up houses in the social rented sector and it will continue to provide priority access to social renters, disabled people, serving members of the armed forces and veterans’.”