The body representing mortgage lenders has played down fears that parts of Scotland are in the grip of a housing bubble after new figures revealed the highest amount handed to buyers by banks since mid-2008.
The Council of Mortgage Lenders (CML) said lending for house purchases in Scotland increased in the third quarter, with 15,100 loans being advanced – up by 9% on the second quarter of 2013, and up by 23% compared with the third quarter last year.
The value of the loans also increased. Mortgages were worth £1.9billion in the third quarter, up in value by 13% on the second quarter of 2013 and by 29% over the same period last year.
Over half the loans were for re-mortgages but the number of first-time buyers also rose in the quarter. The CML said 6,600 mortgages were advanced to first-time buyers, which was the largest single quarter since mid-2008. This was an increase of 8% compared with the second quarter of 2013 and up 32% on quarter three last year.
Howard Archer, chief UK economist at IHS Global Insight, has warned that government schemes could stoke the emergence of a housing bubble in areas outside London.
He said there was “a significant risk that prices could really take off across a widening range of regions over the coming months, especially if the Help to Buy’ mortgage guarantee scheme provides a major boost to already markedly improving market activity and rising buyer interest.”
Iain Malloch, chairman of CML Scotland, noted that lending was still only just above half the levels seen during the peak of the market so “talk of increased lending over-heating the housing market may be premature”.
Philip Hogg, the chief executive of industry body Homes for Scotland also dismissed concerns that parts of the market could overheat.
He said the new figures were “encouraging”.
“With the recently launched Help to Buy (Scotland) shared-equity initiative already making a big impact and a choice of 95% mortgage guarantee schemes now also available, buyers have a range of solutions open to them to help meet their individual needs and home-ownership aspirations.
“We hope this trend is sustainable and continues into 2014 so that this upturn in activity may translate into the building of much needed new homes.
“However, major supply-side issues such as land supply and skills shortages will need to be addressed if output is to increase to the levels required to meet housing need.”