Mortgage dash in March to beat stamp duty, CML says
Mortgage lending rose sharply in March as buyers rushed to complete sales before the end of a stamp duty holiday, lenders have said.
Gross mortgage lending stood at £13.4bn in March, up 30% on February, the Council of Mortgage Lenders (CML) said.
This also marked a 17% rise compared with March 2011, and was the highest monthly total since September.
However, the stamp duty concession has now expired, and lenders expect housing activity to dip again from now on.
The stamp duty exemption for first-time buyers who bought homes valued at between £125,000 and £250,000 came to an end after two years on 24 March. Mr Osborne said it had been "ineffective" in increasing first-time buyer numbers.'Artificial'
The deadline pushed forward some purchases by first-time buyers, and this largely accounted for the recent mortgage pick-up.
Current stamp duty thresholds
- 1%: Properties of £125,000 to £250,000
- 3%: £250,000 to £500,000
- 4%: More than £500,000
- 5%: More than £1m, residential property only
- 7%: More than £2m, residential property only
However, this extra activity was confined to March, according to the CML, and the temporary nature of the rise was stressed by the lenders' group and commentators.
"The underlying picture for house purchase activity has been relatively buoyant in recent months," said CML chief economist Bob Pannell.
"But it is not entirely clear what has powered this, especially at a time when household finances and confidence have remained fragile.
"There has not been much change in first-time buyers' share of house purchase activity, suggesting that - prior to March - the stamp duty concession for first-time buyers had not been a major factor.
"However, we would be surprised if we did not see a drop in transactions over the next few months, following the end of the stamp duty concession."
Mark Dyason, director of independent mortgage broker, Edinburgh Mortgage Advice, said: "The March spike reflects the flurry of activity generated by the stamp duty holiday. It is wholly artificial."
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "We now expect a dip in transaction levels over the coming months, suggesting that we are not yet seeing a sustained recovery in the housing market.
"It is still tough for many people to get a mortgage with lenders raising rates and tightening their interest-only criteria. The troubles in the eurozone are also a long way from being resolved."
The CML also reported that gross mortgage lending for the first three months of the year stood at £34.4bn, down from £37.8bn in the previous quarter, but a 13% increase from the £30.3bn of the first three months of 2011.