The number of potential borrowers looking for mortgages of £175,000 or less on moneysupermarket.com has risen nearly 10 per cent in the last three months as the end of the holiday on stamp duty approaches.
The Government called time on stamp duty until the new year on properties worth £175,000 or less, and these currently account for more than half of all mortgage searches on the comparison website.
Therefore, when the stamp duty holiday comes to an end, it is likely to have a 'severe' impact on the mortgage market, moneysupermarket.com predicts, especially on those looking for first time buyer mortgages.
Commenting, Hannah-Mercedes Skenfield, mortgages channel manager at moneysupermarket.com, said: "Thousands of house buyers are trying to take advantage of the stamp duty holiday before it is due to end. It is encouraging to see an increase in homeowners looking for this band of property, but the reality is that most properties are well above the £175,000 price tag.
"Most buyers looking at this end of the housing market are likely to be first-time purchasers; when the stamp duty benchmark is pushed back to £125,000, and factoring in the huge cash deposit required by the Banks, stepping on to the housing ladder is going to be an impossible leap for many. The average house price in all regions is over £125,000, so this benchmark is exceedingly low."
Ms Skenfield added that improvements in the housing market should encourage the Government to extend the stamp duty holiday.
The recent announcement by the Conservative Party that if it comes to power it will raise the stamp duty benchmark to £250,000 to help first-time buyers is "excellent news", Ms Skenfield continued.
But, she added, "this should be extended to all purchasers - if next time buyers are not able to move due to stamp duty costs, then there won't be any available properties for first time buyers to snap up."
© Fair Investment Company Ltd