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.”