Lending to first-time buyers increased in December as those taking their first step on to the property ladder began to rush through purchases ahead of the end of the stamp duty concession.
According to the Council of Mortgage Lenders (CML), around 18,700 loans worth £2.3 billion were advanced to first-time buyers during the month, up 7% by volume and 10% by value from November.
Under an initiative introduced last year, but which draws to a close on 24 March, first-time buyers are currently exempt from paying stamp duty on properties up to £250,000.
Once the tax exemption finishes first time buyers will face a tax of 1% on house purchases between £125,000 and £250,000, and 3% on purchases over £250,000, potentially adding thousands of pounds to the cost of a mortgage deal.
Confirming the number of higher loan-to-value mortgage deals aimed at first-time buyers is on the rise, Liza-Jane Kelly, sales director of estate agent Marsh & Parsons, said that while raising a suitable deposit still remains a problem, first-time buyer demand for finance is 'by no means dead and buried'.
"With rents rising, and average mortgage rates so low, many see now as the ideal opportunity to get onto the property ladder, " she added.
"A healthy lower tier is crucial to the overall wellbeing of the housing market, with new buyers helping to unlock property chains.
"As things stand, the Government should be doing all it can to support the fragile first-time buyer market – rather than re-imposing the financial barrier of stamp duty for many buyers looking to move after March."
Elsewhere amongst the CML data it was revealed that the overall market for house purchases in December remained virtually unchanged from November.
And summarising the activity seen across 2011 as a whole, the CML said the picture had been 'mixed' for the mortgage market overall.
Remortgage lending during 2011 increased by 17% from 2010, while house purchase lending dropped by 6%.
Yet despite the market being subdued, Paul Smee, CML director general, said there had been a welcome increase in annual gross lending for the first time since the financial crisis began in 2007.
"With the Eurozone problems still rumbling on, however, we believe there is still a real risk that this year's lending levels will be lower than those seen in 2011," he added.
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