Mortgage Applications Still High Despite Stamp Duty Holiday Expiry

From the moment the temporary stamp duty holiday was announced, everyone expected a major post-holiday slowdown. It seemed inevitable that the moment an incentive was withdrawn, mortgage application volumes would take a nosedive.

What happened was nothing of the sort; according to the latest figures published by Money Supermarket, mortgage application volumes are still high and demand for desirable homes in popular parts of the UK has maintained its momentum.

“The stamp duty holiday proved very popular with many homebuyers,” said Jo Thornhill, mortgage expert at Money Supermarket.

“So it’s only natural that many feared its end could lead to a major dip in home-buying interest.”

Polled by Money Supermarket, just 51% of homebuyers said they credited the stamp duty holiday with keeping the housing market moving over the course of the past year; the rest said it had done little other than create a problematic housing bubble.

Commenting on the figures, Money Supermarket said that all indications suggest buyers are predominantly setting their sights on homes that fall below the current £250,000 stamp duty threshold. No stamp duty will be payable on such properties until the end of September, which goes some way to explain the average mortgage borrowing amount of £213,000 today.

Among those taking out mortgages, the two most popular products are currently two-year fixed rate deals and five-year fixed rate deals, Money Supermarket reports.

“Buyers who are able to complete their purchases before October can still make significant savings,” says Thornhill.

95% of LTV mortgages are making an impact

The figures also suggest that the re-introduction of the 95% LTV mortgage is having a positive impact on the sector, predominantly with first-time buyers. Since the beginning of the year, the number of 5% mortgage products available in the UK has increased from 13 to 177.

“This is a positive trend that is making it easier for younger buyers to get on the housing ladder,” Thornhill commented.

Others have criticised lenders offering 95% LTV products for the strictness of their criteria when determining eligible applicants. 5% mortgages hold huge appeal for first-time buyers, though they are restricted to those with an excellent credit score, proof of a high annual income, and evidence of a generally strong financial position.

Average property prices on the up

Taking a look at medium house prices in regions across the UK, Money Supermarket’s report suggested the highest average property prices were in London (£495,000) and the Southeast (£342,000).

The cheapest average property prices were found in Yorkshire and Humberside, the North West, and the North East, falling between £143,000 and £175,000.

As the average mortgage borrowing amount currently stands at £213,000, this suggests most property purchase activity is taking place within these latter regions of the country.

According to Yorkshire and Humberside, the North West, and the North East, almost half of all prospective buyers are worried that the UK is currently facing a housing bubble that could burst at any time. Furthermore, an additional 25% said they did not think the stamp duty holiday was fair, as the timing of the incentive led to a disproportionate number of prospective buyers missing out.