Mortgage lending increased significantly in the run up to the end of the Stamp Duty holiday in March, figures have shown.
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Figures from the Council of Mortgage Lenders (CML) found that 51,200 new mortgage loans were granted to home buyers this March. This is an increase of 44% from February and up by 31% in a year on year comparison.
First-time buyers were keen to snap up their first home before the Stamp Duty concession deadline ended on March 24 for properties up to £250,000. Lending to this group increased by a whopping 74% from February to March this year, bringing the total to 24,000.
Paul Smee, CML director general, said the unprecedented rise was a one-off, but that new government initiatives may have an impact on mortgage lending.
ìWe 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,î he said.
ìIt will take some time before we can judge whether other initiatives such as the New Buy scheme and the reinvigorated right to buy will compensate for this effect.î
The New Buy scheme gives first-time buyers the opportunity to secure a new-build property with a 95% mortgage. The initiative is designed to kick-start the sale of an additional 100,000 homes to those who were previously unable to purchase because of large deposit demands.
Grants Shapps, the housing minister, has said that the scheme is already having an impact on the number of first-time buyers entering the mortgage market.
ìWe are seeing more and more completions regularly coming through. I have met five New Buy purchasers in one development alone in my own constituency,î he said.
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