More FTBs line up to beat Stamp Duty deadline

Tuesday 14th February 2012

House sales edged up slightly last month as first-time buyers looked to beat the end of the Stamp Duty holiday in March, the RICS said this morning.
 
In a separate report, the CML agreed that first-time buyers increased, also because of the Stamp Duty incentive.

But the CML warned that overall mortgage lending this year could be lower than last year – which itself was 6% down on the year before.  

RICS surveyors said they felt more optimistic about the market, although they also reported house price falls, with the majority expecting more to come.

The RICS said that supply of properties on the market rose slightly last month, but overall new buyer demand had dipped.

And whilst first-time buyer activity was up prior to the end of the Stamp Duty holiday, surveyors said that lack of affordable mortgage finance continues to hold back the market.

Meanwhile, the CML said that the number of mortgages to first-time buyers bounced up 7% in December compared with November. The number was also 14% higher than December the year before.

There were 18,700 loans advanced to first-time buyers, with a 3% rise in purchases of properties costing less than £250,000 – the price at which Stamp Duty will again be payable when the exemption ends.

The number of mortgages for home movers slipped 2% on the month in comparison, while remortgages declined 15%.

The final month’s figures for 2011 show what a mixed year it was for the mortgage market as a whole. Remortgage lending increased by 17% from 2010 to £47bn but house purchase lending, at £75bn, was 6% down on the previous year.

Within the house purchase market, lending to both first-time buyers and movers fell in 2011 but first-time buyers fared slightly better. There were 193,000 loans worth £23.4bn taken out by first-time buyers in 2011, down from 200,100 loans worth £23.9bn in 2010  – a 4% fall by volume and 2% by value.

Movers took out 316,500 loans worth £51.4bn last year, down from 343,200 worth £55.1bn in 2010 (down 8% by volume, 7% by value).

Paul Smee, CML director general, said: “We have been expecting a flow of first-time buyers on to the market as the Stamp Duty exemption ends in March. December’s figures appear to show this has now begun.

“The market in 2011, while still subdued, saw a welcome increase in annual gross lending for the first time since 2007, when the financial crisis began. With the Eurozone problems still rumbling on, however, we believe there is still a real risk that this year’s lending levels will be lower than those seen in 2011.”

David Whittaker, managing director of Mortgages For Business, said: “There is a very real danger that the end of the first-time buyer Stamp Duty holiday will mark the beginning of a new slump at the bottom of the housing market as a rush to complete transactions before the deadline is followed by an activity vacuum.

“This will put even more pressure on an already over-burdened rental sector and create more problems for buyers further up the housing ladder who rely on first-timers in their property chains.

“As a result, landlords and professional investors will continue to be relied upon to provide the safety net for the housing market.

“Lenders and government must recognise this contribution and provide investors with as much support as possible. If they don’t, the safety net will almost certainly be too small to catch everyone.”