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Mortgage Deal Numbers Fall

 

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The amount of mortgage products available has dropped sharply after reaching a peak in February.  Experts suggest that this is because the stamp-duty holiday for first-time buyers ended on the 24th March.  The number of deals peaked at 2,757 in February 2012, but the numbers fell to 2,325 in March and then to 2,288 in April.  Another theory for this decline is the introduction of NewBuy - the Government’s latest incentive to get first-time buyers into the market.  This is a policy that is hoped will help 100,000 people to buy a newly-built property with a little help from the builder and a high street bank, but guaranteed by the taxpayer.  Certainly, most of the loan deals that have disappeared seem to be the ones aimed at first time buyers – i.e. those in the highest loan-to-value bracket.

The Bank of England has stated that high street banks are set to tighten their mortgage lending criteria even further in the coming months, prompting a warning of further stagnation in the housing market.  There was a fall in the number of loans approved in the first quarter of 2012, despite a rise in demand from would-be borrowers.  Another product to be severely cut back on was the interest-only mortgage; this has been chopped ahead of the introduction of new set of rules by the FSA.

Halifax Show House Price Rise

The Halifax has recently stated that the housing market has remained “broadly stable” after recording a 2.2% rise in house prices between February and March.  The current low level of sales, however, means that, from month to month, the index has become volatile.  The survey shows that the UK home costs £163,803 – just 0.6% lower than one year earlier – hence the “broadly stable” comment.

Halifax’s housing economist admitted that the closure of the stamp duty holiday for first time buyers could have been a factor in the month-on-month rise: “Efforts by first-time buyers to beat the expiry of the stamp duty holiday at the end of March have probably increased sales in recent months and may have helped to support prices.  We continue to expect little overall movement in prices this year, provided that the UK economy does not suffer a pronounced weakening,” he said.

Sources: bbc.co.uk, lloydsbankinggroup.com (image courtesy of guardian.co.uk)