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

The housing market could be about to improve, if a dramatic new move by Chancellor George Osborne pays off. Last night, he and Bank of England governor Mervyn King unveiled a plan to unleash vast sums of money via high street banks. The Bank of England will pump around £140bn into the banks, on the condition that they pass it on directly in the form of cheaper mortgages and business loans.

One senior Lib Dem described it as hitting the panic button. The schemes are due to start within a few weeks.

The move comes after latest figures show that lending to first-time buyers fell off a cliff in April after the Stamp Duty holiday came to an end.

The Government was accused of having meddled with, and distorted the market, but some pundits thought the fall was little or nothing to do with Stamp Duty, which would only have saved first-time buyers 1%.

According to the Council of Mortgage Lenders, there was a 70% drop in lending for first-time buyers of properties priced between £125,000 and £250,000 – the price bracket where Stamp Duty was reintroduced.

But even lending on properties valued at £125,000 or below, and which remained exempt from Stamp Duty, fell 11%, while first-time buyer lending for properties over £250,000 – which had never had an exemption – fell 5%.

Altogether, lending to first-time buyers in April was down 48% on March, with just 12,600 loans. This was also a 12% decrease on April last year.

Lending to home movers also decreased, by 15% on March’s figures, although up 3% on April the year before. There were 23,400 loans to home movers this April.

Reaction to the huge drop in first-time buyer lending was generally one of ‘I told you so’ acceptance.

CML director general Paul Smee 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.”

Mark Hayward, spokesman for the National Association of Estate Agents, said: “These figures confirm that there is little sign of recovery in the property market, and data from our members shows no green shoots of growth in the levels of property supply and demand.”

David Whittaker, managing director of Mortgages For Business, said: “It seems we can’t go more than a few months without some government initiative, national event or unseasonal weather phenomenon impacting the mortgage market and distorting the lending figures.”

Nick Hopkinson, director of property company PPR Estates, said: “April’s collapse in mortgage borrowing was entirely predictable and is a symptom of the overall return to recession in the wider economy.

“Worryingly, even remortgage numbers are falling again from last year’s lows. This is compelling evidence for anyone who has doubts about the willingness of banks to lend competitively at the moment. Mortgage brokers and financial intermediaries must be really suffering as their main income streams show no sign of recovering from the credit crunch collapse in 2008.”

Brian Murphy, head of lending at Mortgage Advice Bureau, said: “A slowdown in mortgage applications was to be expected after the reintroduction of Stamp duty for purchases between £125,000 and £250,000, and lenders’ continued withdrawal of upfront discounted deals.
“Lenders have been tightening criteria and we saw an increase in both the size of average deposits being put down and in average incomes on applications, which is consistent with a drop in first-time buyers. However, the market is still much stronger than it was this time last year and since then activity has begun to increase again.”

David Brown, commercial director of estate agency chain LSL Property Services, was cautious: “The current economic environment presents an enormous challenge to lenders, with the eurozone crisis continuing to be the major obstacle to an increase in lending.

“As things stand, it’s difficult to foresee the mortgage market significantly expanding in the coming months, and any growth is likely to be driven by buy-to-let lending as the private rented sector grows to accommodate the growing number of frustrated buyers.”  
London estate agent David Pollock, MD of Greene & Co, did not think April’s figures had anything to do with the end of the Stamp Duty holiday.

He said: “That’s nonsense. It’s all about it getting harder and harder to borrow money. Getting a mortgage is becoming more and more difficult: the fluidity of finance and the concern about the economy as a whole are the factors affecting first-time buyers – it’s not about the Stamp Duty holiday. Saving 1% isn’t going to make a blind bit of difference.”


  • icon

    Dave, out of school so early?

    • 15 June 2012 16:03 PM
  • icon

    I thought people may have been bored with my japan stories,but if wou want me to I'll give a brief outline for anyone that hasn't heard it.

    japan had a credit bubble,reduced interest rates to near zero and printed money..the result was stockmarket 75% less than 1991 and property market 40% less than 1991

    some tokyo property fell 99%

    add to that they alienated all but the best from credit,encouraging people to save up for stuff they didn't need,unfortunately when they saved up they found they had lived without said item so didn't buy it...the item also fell in price resulting in a deflationary spiral

    their banks are still zombie and the kids left the country

    • 15 June 2012 15:14 PM
  • icon

    I am sure EAT print such things to keep so many looooonieeees happy so they can post endless rubbish, enjoy yourselves, don't forget to send mummy the link so she can see what you did at school today!!!

    • 15 June 2012 15:12 PM
  • icon


    Need you go on? well old chum.

    You forgot to mention alll BTL'ers are all buggered and this is what went on in Japan, you are slipping mate.

    • 15 June 2012 15:02 PM
  • icon

    Monetize the Government debt. JFDI.


    • 15 June 2012 14:53 PM
  • icon

    in 2007/2008 there was a massive credit crunch where banks didn't trust each other so stopped lending to each other

    the 'solution' was to print huge sums of money,bail out banks with huge amounts of debt

    unfortunately this was the reason banks didn't trust each other in the first place

    So as things stand today we have huge amount of debt more than 2007/2008 and boe prints money everytime another crunch is about to occur

    so things are now worse than in 2007 which is why a crunch comes along every few months...then boe create more debt ensuring another crunch is not far away....do I need to go on?

    • 15 June 2012 14:33 PM
  • icon

    The solution to recovery is to stop the stimulus and take the hit. All we are doing is taking out huge debt to kick the can down the road a few weeks.

    The longer this goes on the more we are all going to suffer seeing Ed BALLs smug face on the TV.

    No Stimulus = No more Ed Balls

    • 15 June 2012 11:57 AM
  • icon


    • 15 June 2012 11:12 AM
  • icon

    Housing is THE leading indicator of economic recovery. Central banks, Governments and lenders must revive this sector quickly.

    New build is not the answer. In Spain the banks have lent to construction firms to allow all unfinished complexes to be completed, but now, no consumers can get a mortgage to buy them. The Gov are doing the same here - pillocks.

    • 15 June 2012 11:04 AM
  • icon

    Maybe crap weather, crap economy and crap football team is the new reality....

    That's why I watch FLOODLIT RUGBY LEAGUE !!!

    • 15 June 2012 10:55 AM
  • icon

    It's ALWAYS the media's fault.

    About time the banks gave these damned journalists a lesson and started to loan money to businesses and house buyers.

    That would learn them...

    (Ironic rant over.)

    • 15 June 2012 10:07 AM
  • icon

    Pollocks. I agree with David Pollock that the poor FTB figures probably have little to do with SDLT. To my mind they have a lot to do with banks seeing most FTB's as a very poor risk so they are unwilling to lend to them. Interest rates are already very low, they really can't be lowered much more ... so the option is to ease lending criteria. Er, wasn't easy lending to poor risk borrowers/buyers exactly what got us into trouble first time around?
    What Europe really needs is a solution to business & manufacturing stagnation & all will follow from there .... easy lending to FTB's who often have a poor track record of saving THEIR OWN deposit (rather than borrowing from family) is a recipe for getting such people into future trouble. I like the idea of kick-starting the housing market ... which has many job knock-on effects .. by encouraging FTB's but we must also protect them from a huge future debt burden. Its like selling a used Mustang to an 18 year old on finance of £50 a week and not explaining to the naiive buyer that this is for 6 years after which there is a 40% residual to stump up ! Banks need to be honest to FTB's

    • 15 June 2012 10:05 AM
  • icon

    1. Richard - I'm talking about the article headline, as my post clearly states.

    2. R.O.R. - Not quite. A Google search for the speeches and using the find text option. Much quicker than sitting through Newsnight!

    • 15 June 2012 09:58 AM
  • icon

    Twice in one week?

    How can this be sensationalist journalism when it is only reporting on what George Osborne says. These are all George Osborne comments so don't blame the journalists. By all means say it's George Osbourne that is sensationalist - now that would be a turn up for the books!

    • 15 June 2012 09:54 AM
  • icon


    You've been watching Newsnight again.

    Careful, that Paul Mason is an ex-member of the Trotskyist Workers' Power Group....and he supports Man U.

    More BBC leftie liberal bias.

    • 15 June 2012 09:53 AM
  • icon

    Misleading and sensationalist headline (and a different one from that which was first published with this story).

    Nowhere in their speeches last night did either George Osborne or Mervyn King make reference to first time buyers, stamp duty or the latest CML data. There were references in both speeches to problems that appear on the near horizon, not in the rearview mirror. To therefore state that the Chancellor is responding to the drop in lending to FTBs is poor journalism.

    • 15 June 2012 09:33 AM
  • icon

    I was just wondering how many FTB mortgages could be subsidised by providing government backed loans to qualifying individuals directly, perhaps via another medium, such as Inland Revenue.

    In other words, how far would £140bn go if it were really and truly directed at FTB's or even 2nd or 3rd timers?

    I simply dont have enough 0's (noughts) on my calculator to do the sums.

    WOuld it be better for the government simply to start buying houses and dishing them out free?


    Is this another 'look after the banking sector' scam?

    • 15 June 2012 09:28 AM
  • icon

    Let's ponder this one for a moment.

    The present economic crisis was caused by decades of borrowing money that we didn't have to spend on things that we shouldn't have bought at prices that could not be sustained.

    And we are going to solve this by getting people and businesses to borrow more money (that we still don't have).

    Am I missing something?

    • 15 June 2012 09:01 AM
  • icon

    Stamp duty holiday = irrelevant

    As soon as the media blabbed that we were back in recession, our viewings immediately fell to a fifth of the previous level.

    Confidence was wafer thin, there is none now.

    Embargo all economic stats. And that Peston fog horn can FO as well.

    • 15 June 2012 08:42 AM
  • icon

    "...on the condition that they pass it on directly in the form of cheaper mortgages and business loans."

    Upper class twit Gideon should have stipulated that last time.


    • 15 June 2012 08:35 AM
MovePal MovePal MovePal