The relative boom in mortgage activity appears to have come to an end as first time buyer numbers dry up with the end of the stamp duty holiday looming.
Mortgage approvals and first time buyer numbers registered a strong increase in December and January, with people looking to make the most of the temporary stop on the levy.
Currently, first time buyers do not have to pay stamp duty on properties worth between £125,000 and £250,000, although the 1% tax is to be reinstated on 24 March.
And with the end of the offer drawing ever closer, figures from e.surv show that first time buyers are backing away from the market, contributing to a 21% decline in house purchases in February.
The number of house purchases dropped to just shy of 47,000, down from the two year high of 58,728 in January – a number boosted by first time buyers completing before the deadline.
In fact, analysis shows that February saw the fewest number of first time buyers complete deals since July, with loans for house purchases of under £250,000 falling by around 10,000 to 33,944 last month.
Mortgages at 85% loan-to-value and above – meaning the buyers have a deposit of 15% or less – also fell to their lowest level since last summer, reflecting the shortage of first time buyers.
Many groups, including the Council of Mortgage Lenders and the National Association of Estate Agents, have called for the Government to extend the stamp duty holiday.
However, in last year's Autumn Statement, the Government said that the initiative had not been as effective as was expected, and there are no signs that it is to be extended.
"The stampede of first-time buyers rushing to beat the Stamp Duty deadline bloated the January figures out of all recognition," said Richard Sexton, director of e.surv.
"They created an artificial spike in approvals, which shouldn't be misconstrued as a sign the market is resuscitating in the long-term.
"At first glance the drop in approvals during February looks alarming, but it is a return to normality after an abnormally frantic winter."
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