Mortgage approvals up in January

Mortgage approval rates in the UK were at their highest for two years in January, figures released by the Bank of England have shown.

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The number of new mortgages approved by lenders in January was 58,728 ñ an increase of 7% on the previous month.

The figures for last month are 30% higher than January last year, and the highest since December 2009, leading some to predict a rise in property sales in the coming months.

But the mortgage approval figures may have been boosted by first time buyers taking advantage of the stamp duty holiday.

“New lending and approvals for house purchases picked up across the market in January, perhaps in part due to first-time buyers taking advantage of the stamp duty holiday before it ends in March,î said Adrian Coles, Director-General of the Building Societies Association.

The two-year concession, which comes to an end on 24 March, has meant that first time buyers have not had to pay the 1% stamp duty on properties worth between £125,000 and £250,000.

ìWe doubt the wisdom of allowing the current stamp duty exemption for first-time buyers to expire in March. We are now likely to see an unhelpful bunching of activity prior to the concession’s expiry, followed by a dip,î said the Council of Mortgage Lenders.

ìOur data suggests that this pattern is already under way. At a time of economic fragility, the loss of the stamp duty concession risks having a disproportionately negative effect on household sentiment, which we believe it would be best to avoid.î

Despite mortgage approvals increasing last month, they are still at around half the level that was recorded in 2006 and 2007 ñ the peak of the last mortgage lending boom.

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