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Lending to first-time buyers plummets

Lending to first-time buyers plummets

Category: Mortgages

Updated: 14/06/2012
First Published: 14/06/2012

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Following a surge of activity in March, April saw a significant fall in mortgage lending, in particular with first-time buyers.

A fall was expected after the end of the stamp duty holiday on March 24.

The largest fall was to first-time buyers, with lending at around half the levels of the previous month.

The drop off in activity for first-time buyers was seen mainly among properties that would have qualified for the exemption in March so were subject to stamp duty in April.

Purchases of properties valued between £125,000 and £250,000 fell by 70% in April compared to March.

By contrast, those valued at £125,000 or below, so still exempt from stamp duty, fell by a more modest 11%, while first-time buyer purchases for properties over £250,000, so not eligible for the exemption in any case, fell by only 5%.

In total, 12,600 loans were advanced to first-time buyers, down by 48% compared to March and 12% compared to April 2011.

By value, first-time buyers borrowed £1.5 billion, down 52% compared to March and 12% compared to April last year.

Lending to home movers also fell. 23,400 loans worth £3.8 billion were taken out in April, down by 15% (14% by value) compared to March but an increase of 3% (by volume and value) compared to April 2011.

"April's figures show the expected effect of the end of the stamp duty concession on UK mortgage lending," said Paul Smee, director general of the CML.

"Given the economic uncertainty, any significant pick up in lending in the coming months seems unlikely.

"However, our recent research highlights that over 80% of people still aspire eventually to own their own homes, and long term demand clearly still exists."

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