The number of first time buyer mortgages taken out saw a two year high in December, as buyers took advantage of the holiday on stamp duty before it ended.
Stamp duty was suspended for properties up to £175,000 until the end of 2009 – in addition to the usual exemption of properties up to £125,000 – so December saw a spike in activity as potential homeowners scrambled to get a foot on the property ladder, according to figures from the Council of Mortgage Lenders.
The highest number since November 2007, December saw 24,900 first time buyer mortgages taken out, as lending in this sector increased to £2.9billion – a 26 per cent rise on November in terms of volume and value.
Reflecting the rush on properties exempt from stamp duty, 55 per cent of mortgages for house purchase in December were for properties costing less than £175,000, up from 51 per cent the previous month.
First time buyers bought 10,300 properties, while home movers bought 11,200 properties worth between £125,000 and £175,000 – a 63 per cent and 49 per cent increase respectively compared to November, which, the CML suggests, is a clear indication that there was a rush to complete purchases before January.
Had they waited until after the deadline, stamp duty would have added one per cent onto the purchase price of the property in transaction costs.
Total mortgages for house purchase was up marginally from 2008, but remained at just over half of pre-credit crunch levels seen in 2007.
© Fair Investment Company Ltd