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Mortgage lending to first-time buyers up 74% in March

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by Jan Harris
Mortgage lending to first-time buyers up 74% in March

Mortgage lending to first-time buyers soared in March, as house-buyers rushed to buy their first home before the end of the stamp duty holiday.

Properties below the value of £250,000, purchased before 24 March, were exempt from the 1 per cent tax.

Twenty-four thousand mortgages were approved for first-time buyers in March, a 74 per cent increase from the previous month and 57 per cent higher than in March 2011.

Ninety-eight per cent of first-time buyers took out repayment mortgages, the biggest proportion since CML records began.

The total number of new mortgages granted in March increased to 51,200, 44 per cent higher than in February, and 31 per cent higher than in March 2011.

The Council of Mortgage Lenders (CML) said that the increase in activity was likely to be followed by a fall back to previous levels.

CML director general Paul Smee said: “We expected this significant increase in borrowing for March because of the stamp duty holiday.

“However, 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.”

In related news, housing minister Grant Shapps has announced the launch of a £30m fund to encourage people to build their own homes.

The fund will provide short-term finance for self-build projects, which are soaring in popularity.

The number of self-build mortgages is expected to increase by 141 per cent.

In order to promote the self-build option in the UK, Mr Shapps has appointed Grand Designs presenter Kevin McCloud.

Just 10 per cent of homes built in the UK each year are the result of self-build projects and the government wants the self-build industry to double in size.

Mr Shapps said: “The self-build industry is riding the crest of a wave, with more people than ever wanting control over the design and build of their home.

“But despite this self-build surge, we continue to lag behind the rest of the world.

“I am determined to change this so anyone who wants to embark on a self-build project has the opportunity to do so.”

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News posted: May 16, 2012

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