x
By using this website, you agree to our use of cookies to enhance your experience.
Written by rosalind renshaw

The Council of Mortgage Lenders is calling for the Stamp Duty break for first-time buyers to be extended beyond March 24 amidst fears of a spring slump. The CML also expressed concerns that overall lending for house purchase will fall this year in any case.

The CML says that it fears a distortion in the market, with a damaging fall in activity after the exemption ends, and argues that it would cost little to keep the break going.

CML chief economist Bob Pannell said: “The CML expects first-time buyer transactions to pick up as the concession end date looms nearer. For those who miss the deadline, the credit-constrained environment we find ourselves in means first-time buyers will increasingly have to fund Stamp Duty from their back pockets, so the end of the concession will have a real impact.”

The CML’s call has been backed by Charles Haresnape, managing director of Aldermore Residential Mortgages.

He said: "The CML is right to ask for the Stamp Duty exemption to be extended beyond March. The cost to the Government would be minor in comparison to the benefit it would offer home buyers on tight budgets. I believe it's incumbent on both government and lenders to do everything possible to help first-time buyers and we need to see more being done to help this important sector of the market."

Separately, Santander Mortgages said it estimated first-time buyers had been saved £319m by the Stamp Duty concession, which came into play in March 2010.

Meanwhile, both the CML and RICS have said house sales have edged up slightly as first-time buyers looked to beat the end of the Stamp Duty holiday.
 
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 while 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.”

Comments

  • icon

    @FTB Dan

    Careful fella, don’t get carried away with how controversial you are as far as I know there is one other poster taking the piss out of you but that’s about it – either way if you’ve had a break then welcome back.

    Your post has got me thinking – its this 2007 thing, you are right it was flipping romp back then but that’s the point, it was ‘back then’ its 4 whole years ago and those still in business have moved on, cut costs, changed business model and most are doing a good impression of running a profitable and sustainable business and aren’t banking on 2007 market conditions in any way

    Phew – I feel all sensible……………time for a Friday snifter.

    Jonnie

    • 17 February 2012 17:13 PM
  • icon

    If agent friend didn't know about SD holiday shows how incompetent EA are.

    • 16 February 2012 20:27 PM
  • icon

    FTB Dan- feel free to stay away or have you been posting as Dave, the idiot?

    • 16 February 2012 16:33 PM
  • icon

    Extraordinary, I have not visited this site for months and I pop back to see what people are saying and on the very first post there is someone taking my name in vain like I am some sort of bogey man.

    Now I used to get cloned very regularly, so I don’t doubt people have been posting in my name regularly over the past couple of months. So for avoidance of doubt, any post under my name since at least Christmas will have been fake.

    It’s really sad that some of you are so obsessed with me. I suppose my common sense message must have been so painful at the time that even though I have since been proved correct beyond any reasonable doubt I am still loathed most viscerally. Or perhaps there are still a handful that really do believe that any minute loose credit will start flowing once more and the whole housing market will light up like a Christmas tree as if 2007 never ended?

    • 16 February 2012 15:53 PM
  • icon

    Anna err thanks (i think) and...i hope this helps

    paragraph one was directly related to the topic

    The rest wasn't directly ....If it helps i do not want a crash either.....something much more gentle or an alternative would be nice.

    • 15 February 2012 20:18 PM
  • icon

    Happy bit of pathetic post for you, you do always come at topics from a different angle but are normally sensible and make genuine points, did some idiot post in your name for that one? More of a Dave or FTB Dan post.

    • 15 February 2012 17:06 PM
  • icon

    Only have one sale myself where this is important.

    Agent friend of mine didn't even know anything about it in the first place...

    I suppose though it depends on the area you work in.

    Mind you average sale price round here over the last 5 years has been in the region of £325,000...

    • 15 February 2012 11:35 AM
  • icon

    The government will probably will do a U turn.... much to the annoyance of people who rushed in to buy property before stamp duty was re-introduced.

    The gov does not wat to see house price crash.....too many MP's have BTL portfolios and the banks balance sheets will look poor again if it does happen

    Prime Minister David Cameron said the UK's credit rating "matters because the most important thing is to keep interest rates low, to keep mortgage rates low".

    • 15 February 2012 09:30 AM
  • icon

    We have found that the exemption of stamp duty for FTB's has been a bonus, but it is not top of the priority list when making a decision to buy or not.

    • 15 February 2012 09:23 AM
  • icon

    "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."

    No sh!t Sherlock. Activity has just been borrowed from the future. Just like the car scrappage scheme, sales will plummet after the deadline passes.

    Time to pay the piper.

    • 15 February 2012 09:20 AM
MovePal MovePal MovePal