First-time buyer lending up 74%

For sale signsLending to first-time buyers surged 74% during March in a rush to beat a deadline for the end of a stamp duty concession, figures have shown.

The Council of Mortgage Lenders (CML) said 24,000 loans worth a combined £3 billion were taken out by borrowers new to the market.
In volume terms, this was 57% higher than a year earlier and up 74% on the previous month as the concession, which meant first-time buyers were free from the 1% stamp duty on homes costing under £250,000, ended on March 24.

First-time buyers accounted for 42% of total house purchase loans in the month, the highest proportion since 2001, the CML added.

While the duty holiday only related to first-time buyers, the impact on other transactions in property chains meant 27,200 loans worth £4.3 billion were also taken out by home movers in March, an increase of 25% on February.

CML director general Paul Smee said it remained to be seen whether other Government initiatives such as the NewBuy scheme will compensate for the end of the stamp duty concession.

He added: "We expected this significant increase in borrowing for March because of the stamp duty holiday. However, if lending follows the same pattern as after previous stamp duty concessions, we will likely see a drop in activity in the next few months."

CML members are banks, building societies and other lenders who together undertake around 95% of residential mortgage lending in the UK. There are 11.3 million mortgages in the UK, with loans worth more than £1.2 trillion.

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