Mortgage lending has gotten a boost from the stamp duty holiday that is due to end on March 24.  January figures from the Bank of England reveal that the first month of the New Year hit a two-year high.  Figures following through March are likely to show the same trend of an increase as buyers return to take advantage of the stamp duty holiday, low interest rates and reduced house prices. 

In January the new mortgage approvals rose by 7 per cent to 58,728 in volume.  In comparison to January of last year it is a 30 per cent increase which reveals that the stamp duty holiday was effective in bringing out buyers.  Once the holiday ends it will be replaced with a 1 per cent stamp duty rate for first time buyers on properties between the value of £125,000 and £250,000.  It was the highest monthly figure since December of 2009.

Experts in the housing market warn that this increase is far from a full recovery but rather a cause and effect result of the discount for first time buyers with the holiday from the usual stamp duty.

Howard Archer of IHS Global Insight said, “Despite the recent pick up, housing market activity is still low compared to long-term norms.

“And despite current signs of improvement, the economic fundamentals still look far from rosy for the housing market with unemployment high and likely to rise further, earnings growth muted, debt levels high and the outlook uncertain.”

Mortgage lending is still tight with loan to value levels still putting pressure on buyers to come up with deposits that are considered difficult to obtain.  Interest rates on both mortgage lending for new purchases and remortgages remain cheap for those with deposits and adequate equity.