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CML: Flow of FTBs in December as Stamp Duty deadline nears

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  • 13/02/2012
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CML: Flow of FTBs in December as Stamp Duty deadline nears
The number of first-time buyers rushing to buy before the Stamp Duty holiday ends increased in December, the Council of Mortgage Lenders has found.

Research revealed 18,700 loans were advanced in December, up 7% by volume from November, where the value of loans rose by 10% to £2.3bn.

However, lending to all movers dipped seasonally in December with the number of loans advanced down 2% to 28,700 with a 4% drop in the value of loans to £4.6bn.

Within the house purchase market, lending to both first-time buyers and movers fell in 2011.

The CML said there were 193,000 loans taken out by first-time buyers last year, down from 200,100 loans in 2010. Home movers took out 316,500 loans last year, down from 343,200 in 2010.

Paul Smee, CML director general said: “We have been expecting a flow of first-time buyers onto the market as the Stamp Duty exemption ends in March; December’s figures appear to show this has now begun.”

Howard Archer, chief UK and european economist at IHS Global Insight said that despite the marginal rise in mortgage advances, the housing market still remains weak.

“The market is likely to be pressurised through the early months of 2012 by weakened economic activity, rising unemployment, muted wage growth and serious consumer concerns over the economic situation and outlook. Credit conditions may also tighten, making it harder to get a mortgage.

“These factors are expected to outweigh the support to house prices coming from extended very low interest rates. Consequently, we continue to expect house prices to fall by 5% in 2012.”

Archer added that the squeeze on consumers’ purchasing power should ease as 2012 progresses and inflation looks set to falls back.

“This may help house prices to stabilise in the latter months of 2012 along with low interest rates. However, unemployment is likely to rise appreciably further and wage growth looks set to remain muted so the overall environment will still be very tough for households.”

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