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Stamp duty effect felt well beyond first-time buyer market

As expected, the end of the stamp duty concession led to a surge in activity in the mortgage market in March, according to new data released by the Council of Mortgage Lenders.

The largest increase was in lending to first-time buyers, who took out 24,000 loans in March. This was an increase of 74% compared to February and 57% higher than March 2011.

By value, first-time buyers took out loans worth £3 billion, up 76% from the previous month and 67% from March last year. First-time buyers accounted for 42% of total house purchase loans, the highest proportion since 2001.

Of those first-time buyers taking out a mortgage in March, 63% bought a property valued between £125,000 and £250,000 so were exempt from stamp duty. This compares to an average of around 50% since 2006 (except immediately before and after the end of the previous stamp duty concession). Around 98% of first-time buyers in March took out a repayment loan, the highest since CML records began.

Although the stamp duty holiday only related to first-time buyers, the tendency for property transactions to involve ‘chains’ resulted in knock on effects to other house purchasers also. There were 27,200 loans, worth £4.3 billion, taken out by home movers in March, up by 25%, 19% by value, compared to February and 15%, 10% by value, compared to March 2011.