Stamp duty rise affects mortgage borrowing

March 1, 2010

Gross lending for home loans fell by 32% compared with December to £9.1bn, the Council of Mortgage Lenders said.
It suggested the decline was due in part to the threshold for paying stamp duty rising at the start of 2010.

However, the figure was 21% lower than January 2009 and the lowest monthly total since February 2000.
Seasonal factors mean that mortgage lending usually falls in January compared with December, but lenders say that the drop was particularly pronounced this year.
The stamp duty threshold dropped back to £125,000 on 1 January, prompting a rush on mortgage approvals and completed home sales in the final months of 2009.

The Bank of England is likely to keep rates low which should continue to help mortgage payment problems and help cushion borrowers from the worst of the recession.
This time last year the mortgage market was at a stand still, but in the past three to four months a lot more products have become available, as lenders once again start fighting for market share.
But while more competitive rates are starting to emerge at higher loan-to-value levels, you still need a faultless credit history if you are to secure a loan.
The Bank of England’s own Trends in Lending report also found that activity in the housing market has dipped owing to the recent poor weather.

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