New data from the Council of Mortgage Lenders shows that house purchase lending in Scotland continued to fall in the first quarter of 2009.

There were 7,600 house purchase loans in Scotland, down 34% from 11,600 in the previous quarter and 52% from the same quarter a year earlier. Across the UK, house purchase lending in the first quarter declined 25% from the previous quarter and 44% from the first quarter of 2008.

The Scottish housing market appears to be lagging behind the rest of the UK. In coming quarters we expect activity in Scotland to stabilise at low levels as seen across the UK as a whole.

Scotland accounted for around 10% of the total number of UK house purchase loans, still a little above the long term average (9%).

The fall in lending was fairly evenly distributed across borrower types. Loans to Scottish first-time buyers fell by 33% from the previous quarter and home movers fell by 36%.

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Lenders have tightened lending criteria further across the UK in response to the worsening economic outlook and funding constraints.

This presents the greatest challenge for young, would-be buyers. Scottish first-time buyers typically needed a deposit of 25% in the first quarter - equal to around £26,000. A year earlier, first-time buyers typically required a 12% deposit - equal to around £14,000. This significant up-front requirement means that only the most affluent borrowers, or those with help from family, are able to enter the market.

The tightening in loan-to-value criteria also affected home movers, but to a lesser extent. Scottish home movers typically had a 29% deposit, compared with 26% in the same quarter a year ago.

Income multiples have also tightened, first-time buyers typically borrowed 2.74 times their income, compared with 2.8 in the previous quarter. Home movers typically borrowed 2.51 times their income, compared with 2.63 in the previous quarter.

For those consumers able to obtain credit, affordability is becoming significantly easier.

In addition, lower house prices mean that some borrowers will not meet lenders' more conservative lending criteria, and so will not be able to remortgage away.

CML Policy consultant, Kennedy Foster said: "Scotland has lagged behind the UK throughout the decline and as a result may continue to do so when the recovery begins. We expect the pace of decline in lending volumes to slow in coming months and flatten out as we have seen elsewhere in the UK."

(GK/JM)