Mortgage Lending Increase in January due to Stamp Duty Holiday
Mortgage lending took off in January through a surge of 10% in a year on year comparison according to the Council of Mortgage Lenders (CML). This was due primarily to the impending end to the UK Stamp Duty holiday. The holiday made properties with a value of 250,000 pounds or less exempt from being taxed. Those homeowners who are considering a remortgage are not affected by the stamp holiday, unless they are seeking a buy to let arrangement. Even though the market experienced a 10% increase in lending, January also saw more than a 14% deficit in mortgage lending compared with the month of December.
While mortgage lending was up for the sixth consecutive month according to the CML data the level of remortgage lending leveled off. Fewer homeowners have been keen to remortgage as there is no threat of a likely interest rate increase from the Bank with inflation dropping.
CML chief economist Bob Pannell said: "Housing and mortgage market sentiment has improved a little over recent weeks. The increase in lending compared to January 2011 helps support our view that housing and mortgage market activity may be boosted by first-time buyers seeking to complete deals before the stamp duty concession ends in March.
"Should inflationary pressures continue to fall back, the squeeze on household finances should ease progressively and help support stronger economic recovery going into the second half of the year. This can only be good news for the housing market further down the track."
Mortgage lending is expected to be in demand as first time buyers should continue to have reason to buy even after the Stamp Duty holiday due to attractive rates and lower house prices on available properties.