End of Stamp Duty Holiday but beginning of cash injection
A report by the Council of Mortgage Lenders revealed that the number of loans for properties valued between £125,000 and £250,000 fell by 70% in April compared to March. This price bracket is considered to be the typical amount of money a first time buyer would spend on a property and since the end of the Stamp Duty Holiday, which ended in March, first time buyer figures have hit a detrimental low.
The Stamp Duty Holiday was introduced by the labour Government in 2010 which meant that properties between £125,000 and £250,000 were exempt from paying 1% Stamp Duty Tax. This scheme was set to boost sales in the lower end of the property market but since Stamp Duty was reintroduced in April, the total amount of mortgage lending fell by £2 billion. The number of home loans was down to 36,000 from 51,600 in March and the amount of loans lent specifically to first time buyers was down by 48% in April.
In a desperate measure to improve the housing market, Chancellor George Osborne has unveiled a plan to unleash £140 billion into high street banks from The Bank of England on the condition that the money will be passed on to the public through cheaper mortgage and business loans.
The Government have been criticized and deemed to have hit the panic stage as house sales are sliding further and further down. Re-mortgage numbers are also falling again since last years lows, this is partly due to banks tightening lending criteria because of the increase of untrue mortgage applications as a desperate measure for some to secure a loan.
Some estate agents are claiming that the end of the Stamp Duty Holiday has nothing to do with the fall in mortgage lending but it’s the banks tightening of criteria which is to blame. House prices are also set to decrease by 3% by the end of the year which could be caused by the Eurozone problems and could further discourage banks from lending.
The total amount of money lent in March was £7.4 billion pounds but the total amount lent in April was down 2 billion to £5.3 billion.
If you would like to read more about the Stamp Duty Holiday, a selection of previous blogs are listed below;
Do you think the Chancellors has panicked and will regret the rushed decision to lend billions to the banks or do you think it will help the recovery of the housing market?(0) Comments
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