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Mortgage Lending Jumps In March

The Council Of Mortgage Lenders (CML) has said that mortgage lending jumped in March after subdued couple of months caused by the slump over Christmas. The figures have been welcomed by estate agents and property experts who will want to see the rise in lending continue in order to stave off a downturn.

The number of new loans issued by banks and building societies stood at 51.200 which was an increase of 44% on February and 31% higher that in March 2014. The other good news is that the number of new loans issued to first time buyers increased by 74% which has been welcomed because they are seen as a critical cog in the recovery of the housing market.

Stamp Duty Holiday Ended In March

Much of the activity in March has been put down to the stamp duty holiday for first time buyers that spend up to £250,000. This means that a any first time buyer can make a saving up to £2,500. the rise in mortgage lending was expected in March because of this and is also expected to grow over the next couple of months as the economy continues to recover and and job prospects improve. Wages are also starting to improve amongst first time buyers and this is also expected to continue the momentum.

The government has laid claim to the recovery in the housing market as buyers flock to take advantage of the various incentives on offer to buyers. Stamp duty was recently given a holiday on house purchases up to £250k and this appears to have persuaded any wavering first time buyers that this is an opportunity to miss. There are other schemes that have been put in place such as the New Buy Scheme and the reinvigorated Help to Buy.

New Incentives On Offer

However it is still too early to see what impact these will have on the market. The New Buy Scheme which has been introduced by the government ensures that property developers will insure the top slice of any losses on 95% mortgages granted by lenders in England. It is hoped that this will help people that would not otherwise be able to buy a home get onto the housing ladder. The figure of 100,000 new buyers entering the market has been muted. It is too early to tell if this scheme will be successful.

Industry experts expect the housing market to take a slight dip in April because the stamp duty holiday has now ended. The general election is also looming but so far this has not had any affect on the market. Most election years have a negative impact on the housing market as buyers look to see how a change in government could affect them.

The best mortgages are still only available to those buyers that have a 25% deposit. In terms if interest rates the best rates are only accessible if you have a big deposit. rates are higher for those buyers who are looking at a loan to value of 95%. Banks and building societies are still risk averse but are also now constrained by the new mortgage rules that were introduced last year by the Bank of England. The new affordability rules have made it harder to get a loan particularly if you are looking for a high loan to value loan.