Continuing problems with mortgage lending remain the single biggest threat to the survival of Scotland’s home building industry and the major obstacle to recovery in the housing market more generally.

This was the view expressed by Gerry More, the new Chairman of representative body Homes for Scotland, during his first Board meeting in his new role today, where the issue once again topped the agenda.

The situation was brought into sharp focus by an analysis of the mortgage products available to buyers of new homes. This showed a staggering 89% drop in the number of 90% mortgages available to buyers in the period May 2009 to May 2010 with only one product available on this basis. The number of mortgages available over other loan to value ratios also fell significantly and for those looking to purchase a flat, the situation is even worse with the best loan to value ratio available starting at 85%.


Mr More also highlighted ongoing problems with corporate lending and said: “It’s now two years since mortgage lending fell off the side of a cliff. Since then we’ve had to rely on rhetoric about slowly increasing lending levels delivering tangible improvements in this area. But the fact of the matter is that the situation is only getting worse, particularly for First Time Buyers and those with little or no equity in their existing properties who are struggling to find larger deposits to buy a home to live in. Whilst our members do all they can to assist buyers in this regard, the position with lending remains dire with, it seems, little prospect of improvement.

“Our country is facing its biggest housing crisis since the Second World War but our banks appear to be failing spectacularly in this area with no apparent strategy in place to increase mortgage lending to credit-worthy buyers to more sensible levels and terms. The situation looks set to intensify once state support for the banking industry starts to be rolled-back next year.”

Jonathan Fair, Homes for Scotland Chief Executive, added: “If the new Government’s hopes of a private sector-led recovery are to have any real credence in the housing sector, it must cut through the myriad of reasons that lie behind these lending issues and take urgent action to deliver a sustainable long-term mortgage market.”

(GK)