Mortgage lending jumps by 10% as first-time buyers scramble to do deals before end of stamp duty amnesty

Published 20th Feb 2012

* Amount lent in January up a tenth compared to same
time last year




The amount lent in mortgages has leapt 10 per cent in the past year as first-time buyers race to seal deals before the stamp duty amnesty ends.

Year-on-year figures rose for the sixth month in a row after banks and building societies lent £10.5billion in January, said the Council of Mortgage Lenders (CML).

Although seasonal factors meant the figure was 14 per cent weaker than in December, the CML said the performance was in line with improved sentiment in the housing market.

The industry body believes the March 24 deadline for the end of the stamp-duty free period for first-time buyers on properties under £250,000 has boosted activity.

In January 2011, a total of £9.5billion was lent in mortgages, the CML said.

CML chief economist Bob Pannell said: 'Should inflationary pressures continue to fall back, the squeeze on household finances should ease progressively and help support stronger economic recovery going into the second half of the year.

'This can only be good news for the housing market further down the track.'

The scale of the recovery, while remarkable, must be seen in context of the depths of the market has sunk to.

Last year saw a property market freeze in which home purchases hit the lowest level in 27 years, despite record low mortgage rates on offer.

Mortgages for home buyers fell below even the level recorded during the 2008 and 2009 property slump when house prices were falling at almost 20 per cent annually.

A separate report released last week by the Royal Institution of Chartered Surveyors also claimed new homeowners were rising as the stamp duty amnesty deadline approaches.

But it said while that meant members were more optimistic for the coming months: 'Many problems with the market still exist and the lack of affordable mortgage finance is still preventing many from getting onto the property ladder.'

Although house prices are only registering slight annual falls, the mortgage data highlights how the property market is stuck in the doldrums, with potential buyers shying away due to large deposit demands, tight credit checks and economic fears.

The fortunes of the residential property market stand in contrast to buy-to-let, with the CML reporting landlord mortgages for purchase were up 20 per cent last year.

Mortgage figures, however, do not entirely reflect the housing market. The CML estimated last year that around 40 per cent of sales are now to cash buyers up from around 15 per cent in 2005.

Some are equity-rich older homeowners downsizing, but many are investors, foreigners, or developers working on conversions and refurbishments.

A new report from upmarket estate agent Savills suggests the cash buyer figure could be higher. It claims mortgages now fund just 46 per cent of purchases.

Source: ' ThisIsMoney '

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