It is unclear how the housing market will perform through the spring months into the summer.  It was evident by data that the first quarter of the year was getting a boost from the stamp duty holiday that expired on March 24.  First time buyers able to benefit from the stamp duty holiday rushed to close on a purchase and get the 1% savings due on properties up to £250,000. 

The Council of Mortgage Lenders (CML) data revealed that first time buyers took out 24,000 mortgage loans in March which was an increase of 74% over the February level and it was an increase of 57% over the level reported in March of last year.  The overall mortgage lending for March involved a total of 51,200 of which 29,200 were remortgages.  First time buyers were responsible for 42% of the total and this was the highest level for first time buyers since 2001.

It is unclear if the momentum of buying by first time buyers will have a chain reaction of pushing those that sold their starter home into another home and then onward as current homeowners upgrade to other properties. 

Paul Hunt, managing director of Phoebus Software, said, “While bunting and party hats would normally be in order following a 76% monthly rise in lending value to first-timers, March’s figures are the crest of a wave.

“April undoubtedly will show falls on a similar scale. We will see an apparently violent fall in lending next month, but these big fluctuations mask the true picture of ongoing steady progress in the lending market.”

The director general of CML, Paul Smee, has the same outlook as he responded, “We expected this significant increase in borrowing for March because of the stamp duty holiday.

“If lending follows the same pattern as after previous stamp duty concessions we will likely see a drop in activity in the next few months.

“It will take some time before we can judge whether other initiatives such as the NewBuy scheme and the reinvigorated right to buy will compensate for this effect.”