Imminent end of stamp-duty holiday sparks lending rush

MORTGAGE lending is higher year-on-year for the seventh month in a row, as first-time buyers race to take advantage of a stamp-duty concession before it ends.

About £10.7 billion was lent in February, a 14 per cent rise on the same month in 2011, the Council of Mortgage Lenders (CML) said, with the two-year stamp-duty holiday for first-time buyers purchasing homes worth between £125,000 and £250,000 ending this Saturday.

The looming deadline has prompted a recent surge of interest from this sector of the market, according to lenders and estate agents, who have called for the holiday to be extended amid fears that the fragile housing market could be disrupted further.

The latest lending figure is “almost identical” to the previous month, when £10.65bn was lent, as lending for house purchase remains “brisk” ahead of the withdrawal of the concession, the CML said.

CML chief economist Bob Pannell said: “Although a seasonal decline is expected over the winter months, our forward estimates suggest that February was the seventh month in a row of higher year-on-year lending.

“This indicates that lending for house purchase remains brisk in advance of the ending of the stamp duty concession.”

Mr Pannell said the pick-up in activity also appeared to mark “a more generalised improvement” across the market, perhaps reflecting hopes that the squeeze on household incomes caused by high bills and job fears was easing off.

He said: “This may reflect household sentiment stabilising in anticipation of a recovery in real incomes, but wider economic uncertainties make it difficult to judge how well the upturn will persist.”