Mortgage borrowing falls due to stamp duty
March 9, 2010
According to a mortgage industry group the level of mortgage borrowing for the month of January has been affected by the increased threshold when it comes to stamp duty in the UK.
During the recession the government increased the threshold on stamp duty to apply to properties up to the value of £175,000, which was an increase from the standard threshold of £125,000. However, this was a temporary measure that came to an end at the end of 2009.
The government announced that the stamp duty exemption would be reducing back to its original level at the end of the year, and because of this there was a rush on in the months leading up to the end of the year amongst those that were looking to buy property and wanted to avoid paying stamp duty. This saw the level of mortgage borrowing in December increase and the level of housing transactions increase over the course of the month.
However, the Council of Mortgage Lenders has reported that for the month of January mortgage borrowing fell by 32 percent compared to December, and the group believes that this is largely due to the fact that many people rushed to buy property in December causing a deeper than usual fall in January.
The CML stated: “Recent developments have been influenced by the end of the stamp duty holiday, and are likely to foreshadow a larger than usual seasonal drop off in activity in the early part of this year.”
Officials have said that January tends to see a dip in mortgage borrowing as a result of seasonal factors, but this year the fall has been greater than most years because most people did their purchasing before the stamp duty exemption ended at the end of last year.
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