Scottish Housing Market Review: Q2 2025

5. Mortgage Approvals and LTVs

5.1. New Mortgage Advances

There were 6,990 new mortgages advanced to first-time buyers in Scotland in Q1 2025, an annual increase of 15.7%. Meanwhile, there were 6,260 new mortgages advanced to home movers in Scotland in Q1 2025, an annual increase of 10.2%. Over the year to March 2025 the number of mortgages advanced to first-time buyers was 17.0% higher than in the year to March 2024; for homes movers the increase was 15.0%. [Source: UK Finance]

Source: UK Finance

5.2. Mortgage Approvals

Chart 5.2 plots the monthly number of mortgage approvals across the UK for house purchase by individuals. Mortgage approvals for house purchase, which are the firm offers of lenders to advance credit fully secured on dwellings by a first-charge mortgage, are a leading indicator of mortgage sales as they reflect activity early in the buying process.

The number of mortgage approvals in the UK between January and March 2025 was 10.4% higher than the same period a year earlier. While this likely reflected an improving market, the figures would also have been temporarily boosted by buyers in England attempting to purchase ahead of the temporary Stamp Duty Land Tax cut in England expiring on 31 March 2025. Consistent with this, approvals fell by an annual 8.0% in April 2025, although they then recovered to be down by only 0.8% on an annual basis in May 2025. [Source: Bank of England].

Source: Bank of England

5.3. Loan-to-Value (LTV) Ratios

Chart 5.3 shows that after initially falling following the Covid pandemic, mean LTV ratios on new mortgages advanced to both first-time buyers and home movers in Scotland recovered to their pre-pandemic levels, before declining again as the upward trend in interest rates beginning at the end of 2021 fed through to mortgage lending. Subsequently, the mean LTV for first-time buyers, although not for home movers, recovered towards its post-pandemic peak.

More recently, the mean LTV ratio for first-time buyers fell slightly over the quarter from 82.7% to 82.4% in Q1 2025 although this remains close to its post-pandemic peak of 83.4% in Q2 2022. In contrast, the mean ratio for home movers increased over the quarter from 69.3% to 69.6%; however, this is 3.1 percentage points below its post-pandemic peak of 72.7% in Q2 2022. [Source: UK Finance]

Source: UK Finance

The share of all regulated residential lending across the UK with an LTV greater than 90% increased slightly from 6.9% in Q4 2024 to 7.3% in Q1 2025 which is the highest level since Q2 2008, prior to the impact of the 2008 financial crisis. The share of all lending with both an LTV greater than 90% and a high income multiple also rose slightly from 5.1% in Q4 2024 to 5.3% in Q1 2025. Similarly, this is also at the highest level since before the start of the 2008 financial crisis. This recovery in higher-risk lending will have contributed to the increase in the mean LTV ratio for first-time buyers in Scotland discussed above.

Source: FCA. Higher-risk lending is classified by the FCA as an LTV over 90% or an income multiple greater than or equal to 3.5 for single-income purchasers or 2.75 for joint-income purchasers.

The total number of residential mortgage products fell by 150 over the month to stand at 6,843 in early June 2025. Despite this, product number are higher than in June 2024 (6,629) and there are over 300 more products available than in January 2025. The number of products with maximum LTV of 95% fell over the month (by 9 products) to stand at 453 in early June. [Source: Moneyfacts UK Mortgage Trends Treasury Report]

Mortgage shelf life is the length of time between the launch of a product and its repricing or withdrawal from the market, and average shelf life can be an indicator of volatility in the mortgage market. The average mortgage product shelf life in June 2025 of 17 days was slightly down from May 2025 (19 days) but slightly above June 2024 (15 days). [Source: Moneyfacts UK Mortgage Trends Treasury Reports]

There has been a significant increase in the number of buy-to-let (BTL) products, which have risen from 3,231 in December 2024 to 4,144 in June 2025, the highest level since Moneyfacts records for this series began in 2011. [Source: Moneyfacts UK Mortgage Trends Treasury Reports]