News article 27//08/2012 (2)

(Issued 27 August 2012) 

The latest Scottish statistics published by the Council of Mortgage Lenders (CML) and Bank of Scotland both highlight the main obstacle to recovery in the housing market according to home building industry body Homes for Scotland.

Chief Executive Philip Hogg said:

“CML’s research shows an overall rise in lending for house purchases in Scotland in the second quarter of this year. This is positive news, demonstrating the demand for home ownership which clearly still exists in Scotland. Despite the continuing economic uncertainty, thousands of Scots are still buying and moving home.

“However, the figures also show that First Time Buyers are having to find an average deposit of 20% and home movers an average of nearly 30%. This equates to more than £31,000 and £43,000 respectively based on an average Registers of Scotland 2011/12 home price of £156,4192 - considerably more than the corresponding 7% and 11% deposits each group had to find ten years ago.

“The issue of deposits is also highlighted by Bank of Scotland which notes a four-fold rise in the average home mover deposit since 2002 and says that those looking to take their second step on the property ladder are facing the toughest market conditions for over a quarter of a century.

“Large deposit requirements have locked many credit-worthy, would-be buyers out of the market which is why we are working so hard to launch our innovative MI New Home scheme as soon as possible. Supported by the Scottish Government, it seeks to bridge the deposit funding gap by enabling participating lenders to offer mortgages of up to 95% on homes sold by participating builders to those who can sustainably afford them. It is estimated that this could, over three years potentially assist some 6,000 households, helping to get the market moving again and giving the economy a much needed boost.”