It is largely accepted that the scheme did not make as much of an impact as was hoped.
While mortgage approvals hit a 25-month high in January, due primarily to a spike in demand from first-time buyers, according to the Bank of England, that increase had much to do with the rise in number of high loan-to-value (LTV) mortgage products available, rather than just the desire to save up to £2,500 on Stamp Duty.
And yet, there is fall-out already.
Two days after the Stamp Duty holiday ended, Skipton Building Society – which has become a champion of 95% LTV lending in the past year as it was one of the few prepared to do it – announced that it is pulling out of the market. The lender said it’s struggling to meet demand and would review its position before deciding whether or not to return.
This is bad news for first-time buyers.
It puts pressure on those other lenders in the 95% space, such as Mansfield and Leeds building societies.
As we have seen recently with interest-only borrowing, once one lender reins back, the others tend to follow as they are inundated with demand they can’t handle.
What a shame if Skipton feels it can’t offer 95% deals again, as there is clearly demand for them. While it will still lend up to 90% LTV, 95% is the only way many first-time buyers are going to be able to make the jump from rental accommodation onto the housing ladder.
While critics argue that borrowing at 95% is exceptionally risky because of negative equity, if you are prepared to stay in the property for some time and take a five-year fix to buy yourself a level of protection, what really is the issue? And what is the alternative to buying with a 5% deposit?
Research from Savills and Rightmove out this week shows the huge cost of renting and how it is only going to get worse. The total rent bill was £48bn last year and is expected to rise to £70bn in 2016.
Rents rose an average of 5.2% across the UK last year as a result of a shortage of supply. Having to save more than 5% of the purchase price of a property when you’re faced with ever-rising rental payments is too much for many.
While the Government’s NewBuy Guarantee scheme will help those with a 5% deposit who want to buy a new-build home, it will be a drop in the ocean when you consider the many would-be first-time buyers who are seeing their dream of homeownership ebb ever further away.
Melanie Bien is director of Bien Media