Lending to first-time buyers soars 74 per cent

LENDING to first-time buyers across the UK surged by 74 per cent during the final month before the deadline for the end of stamp duty concessions, newly released figures have revealed.

Council of Mortgage Lenders (CML) statistics showed that 24,000 loans worth a combined £3 billion were taken out by borrowers new to the market – a figure 57 per cent higher than a year earlier and up 74 per cent on the previous month.

The figures covered the final month when first-time buyers were free from the 1 per cent stamp duty on homes costing under £250,000, which ended on 24 March.

While the duty holiday only related to first-time buyers, the impact on other transactions in property chains meant 27,200 loans worth £4.3 billion were also taken out by home movers in March, an increase of 25 per cent on February.

CML director general Paul Smee said it remained to be seen whether other government initiatives such as the NewBuy scheme will compensate for the end of the stamp duty concession.

He added: “We expected this significant increase in borrowing for March because of the stamp duty holiday.

“However, if lending follows the same pattern as after previous stamp duty concessions, we will likely see a drop in activity in the next few months.”

CML members are banks, building societies and other lenders who together undertake around 95 per cent of residential mortgage lending in the UK.