Posted on February 16th, 2010 | Categories - House Prices
The rush to beat the end of the stamp duty concession saw a big rise in loans made to house buyers in December, says the Council of Mortgage Lenders (CML).
There were 62,800 such loans, up by 23% from November and 90% higher than in December 2008.
The number of loans made to first-time buyers also jumped in December, by 26% from November, to 24,900, which was the largest number since November 2007.
The stamp duty threshold dropped back to £125,000 on 1 January which helps to explain the rise in mortgage approvals in December, especially amongst first time buyers who the stamp duty reduction was primarily aimed at.
“55% of house purchase loans were on properties costing under £175,000 and therefore exempt from stamp duty, up from 51% in November,” the CML said.
“This clearly indicates a rush to complete purchases before January, when stamp duty would have added an additional 1% of the purchase price onto the transaction costs,” it added.
Completed sales of homes below the temporary stamp duty threshold, in England and Wales, also rose sharply in the last three months of 2009, other research showed.
However, despite the stamp duty incentives The CML’s figures showed that the number of loans made to house buyers in the whole of 2009 was barely higher than the previous year, at 517,000.
That was still only just over half the number lent in 2007, before the effects of the credit crunch were felt fully.
Furthermore the number of people who were re-mortgaging slumped by more than half to 408,000 loans as many find that it is not economical to change lender.
The constant stream of data about the housing market reflects the current uncertainty about house prices and where they will go in 2010, most experts predict a small rise, however a significant minority believe that they could fall, especially if interest rates start to rise and the widely predicted government cuts effect the fragile economic recovery.