Landlord 'surge' pushes up mortgage lending
A "late surge" among landlords aiming to beat a stamp duty rise led to a big jump in mortgage lending in March.
Gross mortgage lending hit £25.7bn last month, the Council of Mortgage Lenders (CML) said. This was 59% higher than in the previous March.
A 3% stamp duty surcharge was introduced on 1 April for purchases of homes that are not the buyer's main residence.
The CML said it now expected sales to drop off after the extra tax came in.
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The stamp duty surcharge, announced in Chancellor George Osborne's Autumn Statement, relates to second homes and buy-to-let properties in England, Wales and Northern Ireland.
In Scotland, the equivalent tax - the Land and Buildings Transaction Tax (LBTT) - has also been up-rated.
The result of the 1 April start date was a surge in purchases from landlords in March, according to the CML. This potentially had a knock-on to other buyers who might have found mortgage brokers and solicitors were busier than usual, slowing the buying process.
Gross mortgage lending was 43% higher than February, the CML said.
"The distortion caused by this stamp duty change appears to be larger than any previous stamp duty change we have seen," said CML economist Mohammad Jamei.
"As a result, we expect there will be about 10,000 fewer mortgaged transactions each month in the second quarter of 2016 than would otherwise have been the case, offsetting the increase in activity seen in March."
The surge was also recorded in property sales data from HM Revenue and Customs (HMRC).
There were 161,990 properties sold in the UK during the month, the highest monthly number since June 2006, and up from 92,690 sales in February.
|Stamp Duty Bands|
|Price band||Standard rate||Buy-to-Let/ 2nd home|
|Up to £125,000||0%||3%|
|£125,001 to £250,000||2%||5%|
|£250,001 to £925,000||5%||8%|
|£925,001 to £1.5m||10%||13%|
|Source: HMRC (England and Wales)|
A Treasury spokesman said: "The new higher rate of stamp duty on additional properties will help double the affordable housing budget and support even more first-time buyers fulfil their ambition of owning their own home.
"House purchases vary widely across the seasons and we always expected some buyers to bring forward their purchases - indeed this was factored into our costing when the policy was announced. We expect this to level out in the coming months."
The Bank of England has announced plans to subject landlords to a series of new affordability tests.
Their personal income and expenditure could be scrutinised by lenders before they decide to give them a mortgage.
Landlords may also have to prove that they can afford a rise in borrowing costs.