Halifax has launched a 1% cashback mortgage designed to alleviate the burden of Stamp Duty for first-time-buyers.
The product comes on the back of the government's failure to reclassify Stamp Duty bands in last months' budget. With the average cost of property in the UK now over £100,000 it means the majority of first-time-buyers are now paying over £1,000 in Stamp Duty.
The 1% cashback mortgage is fixed at 5.99% for five years, 97% LTV, with a refunded valuation fee and free conveyancing. The product also comes without the free conveyancing fixed for five years at 5.89%.
In 2003, for the first time, the average first-time buyer in every region in the UK paid Stamp Duty. Ten years earlier in 1993 – the last time Stamp Duty threshold was changed – the typical first-time-buyer paid no Stamp Duty except in London.
Halifax says that if Stamp Duty had been raised in line with house price inflation, by index linking the thresholds to house price growth, then the entry-level threshold would be £143,000 rather than the current £60,000.
Research recently published by the UK's biggest lender, highlighted that eight out of ten towns were already unaffordable for the majority of those buying their first home during the last year.
Paul Fincham, spokesperson for Halifax, says: “A lot of comment has been made about the governments failure to index Stamp Duty, in particular first-time-buyer thresholds. From a first-time-buyers point of view it has become increasingly difficult to get a foot on the property ladder. This product has been designed to provide a welcome boost.”