The number of mortgages taken out in Scotland increased by 50% in the second quarter of this year – sparking “extremely encouraging” signs that the embattled property market is starting to recover.
New data from the Council of Mortgage Lenders show 11,400 home loans were taken out in Scotland in the second quarter of 2009.
The figure is up from the 7,600 recorded in the previous quarter, but 39% below the same time last year.
Property experts in the north and north-east last night welcomed the figures and agreed that the market was showing welcome signs of recovery.
The Scottish figures were published the same day it was revealed mortgage arrangement fees charged by banks and building societies have fallen by around a quarter in the UK during the past year, prompting experts to conclude it was a sign of the credit crunch easing.
The rise in mortgage lending from April to June in Scotland was spread evenly across first-time buyers and home movers.
There were 4,300 loans to first-time buyers, 54% up from the previous quarter. There were also 7,200 loans to home movers, 53% higher than the previous quarter.
The Council of Mortgage Lenders said the picture in Scotland was similar to that in the rest of the UK although mortgages were slightly more affordable because house prices remained lower.
Mortgage lending had been up significantly in Tayside, said Ken Thomson, a partner with Thorntons, one of the biggest firms in Dundee and Angus.
He added: “I would say the 50% figure would be the same across Tayside. The market is improving and this will install a lot more confidence.
“Things were looking bad at the start of the year but the increase in the second quarter was noticeable, as these statistics highlight.”
Chief executive of Inverness Chamber of Commerce, Stewart Nicol, said the increase will benefit a number of industries.
He said: “The figures are hugely encouraging for many businesses.
“The housing market impacts many things and in the Highlands the construction industry has taken a really bad hit. This type of increase mean a lot to many businesses and, hopefully, we can continue to see rises over the coming months.
“This is, hopefully, a sign that things are starting to recover and the strains of the credit crunch may be easing in Inverness and the rest of the country.”
Seconding the view that the signs were encouraging was Gordon Wilson, managing director of financial advisers Thomson Shepherd.
He said: “There have been some good signs that things are improving for a while.
“I think this rise is probably higher than expected so it is extremely encouraging and an important indication of where the market is at the moment.”
The chairman of Aberdeen Solicitors’ Property Centre, John MacRae, said: “I don’t think we have had a 50% increase in activity in Aberdeen but we have seen a steady rise.
“The market at the start of the year was quite poor but it has got increasingly better. Certainly, the feedback I get from member firms is showing signs of improvement.”
According to the figures, first-time buyers typically put down a 25% deposit in the second quarter, unchanged from the previous quarter but up from 13% a year earlier.
Those taking their first steps on the housing ladder typically borrowed 2.85 times their income.
Home movers typically borrowed 2.55 times their income (2.73 for the UK as a whole).
The Council of Mortgage Lenders in Scotland’s policy consultant, Kennedy Foster, said the figures showed that lending in the mortgage market was beginning to stabilise, which was encouraging.
But he warned: “It will be a slow path to full recovery, with significant obstacles presented by the restricted access to mortgage funding, fewer active mortgage lenders in the market, rising unemployment and limited consumer demand".
Figures published yesterday by financial website moneysupermarket.com show the average fee charged to borrowers taking out a two-year fixed rate mortgage has dropped from £1,243 in 2008 to £957.
There has also been a 26% fall in the average arrangement fee for a three-year fixed rate loan, with this dropping to £808, while fees on tracker deals are 24% lower than a year ago at £1,272.
Lenders raised the fees they charged on mortgages after the credit crunch first struck as they looked for alternative ways to generate revenue in the face of higher funding costs.
The fall in fees rates is being seen as a further sign that the impact of the credit crunch is beginning to ease.