FTBs rush to beat Stamp Duty

The number of first-time buyer loans in December rose to its highest level for two years as consumers scrambled to buy ahead of the end of the Stamp Duty holiday.

The Stamp Duty threshold was temporarily raised to £175,000 last year in an attempt by the government to kick-start the housing market.

At the end of December the threshold was restored to £125,000.

Figures from the Council of Mortgage Lenders shows that in December 24,900 loans were advanced to first-time buyers, the highest number since November 2007.

First-time buyer loans totalled £2.9bn in December, up 26% from November in terms of volume and value.

The CML data shows that 55% of house purchase loans were on properties costing under £175,000, up from 51% in November.

Some 10,300 first-time buyers and 11,200 home movers bought a property for between £125,000 and £175,000 in December.

These figures are up 63% from November’s levels for first-time buyers and up 49% for home movers.

House purchase lending overall hit £8.5bn in December, accounting for 63,000 loans worth £8.5 billion in December, up from
£7.1 bn in November and £4.4bn in December 08.

The number of loans for remortgage stayed level at 28,000, with the value falling from £3.5bn to £3.4bn, and was down from 41,000 transactions worth £5.7bn in December 2008.

At the same time as publishing the lending figures for December, the CML has also released research on affordability and how repayment mortgages have been affected by the low interest rate environment.

Bob Pannell, author of the CML research, says: “With 90% of loans advanced in December being repayment mortgages, it would seem appropriate to take capital payments into account when assessing affordability.

“Typical capital and interest payments for a recent first-time buyer would represent about 21% of pre-tax income.

“This is considerably more than the 14-15% that mortgage interest costs alone would be, and demonstrates why using initial mortgage interest costs to assess affordability risks giving an overly flattering picture.”