Mortgage lending falls after stamp duty holiday
Thursday, 14 June 2012 12:57 PM
April saw a significant fall in mortgage lending with loans to first-time buyers down by half, according to new figures.
The Council of Mortgage Lenders (CML) said the fall was in line with expectations and was caused by the end of the stamp duty holiday for first-time buyers in March.
The fall in activity by first-time buyers was mostly in homes that would have qualified for the stamp duty concession in March. Sales or properties priced between £125,000 and £250,000 fell by 70 per cent in April compared to March.
Sales of homes below £125,000, which are still free of stamp duty, only fell 11 per cent. And sales of homes over £250,000, which did not benefit from the holiday, were only down five per cent.
April saw 12,600 loans advance to first-time buyers, down 48 per cent on March and 12 per cent on a year ago. By value, first timers borrowed £1.5bn, down 52 per cent compared to March and 12 per cent on a year ago.
First-time buyers borrowed 3.12 times their income, down from 3.34 in March, but this reflected purchases of cheaper properties that qualified for the holiday rather than a real improvement in affordability.
Lending to home movers fell 15 per cent compared to March but was up three per cent on a year ago.
Paul Smee, director general of CML, said: "April's figures show the expected effect of the end of the stamp duty concession on UK mortgage lending. Given the economic uncertainty, any significant pick up in lending in the coming months seems unlikely.
"However, our recent research highlights that over 80 per cent of people still aspire eventually to own their own homes, and long term demand clearly still exists."
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