Mortgage brokers have reported an influx of enquiries following the temporary cut in stamp duty announced by chancellor Rishi Sunak last week.
Within a day of the announcement on July 8, Rachel Dixon, mortgage adviser at RH Dixon said she had received over 17 new mortgage enquiries. According to Ms Dixon, the level of enquiries was more than she had ever received in a single day.
She added: “These seem to mainly be from clients who have properties and are keen to capitalise on the savings of the stamp duty.”
In his summer statement on July 8, Mr Sunak confirmed an immediate increase in the residential stamp duty threshold from £125,000 to £500,000 until March 31, 2021.
According to Mr Sunak, nearly nine out of 10 people buying a main home this year will pay no stamp duty at all, with the average bill falling by £4,500.
Anthony Rose, director at LDNfinance, also said his firm had received many new enquiries, and predicted a “rush of enquiries” from landlords looking to take advantage of the stamp duty cut.
Mr Rose added that clients, who were previously unable to transact, were now able to proceed as a result of the cut.
Likewise Jamie Lewis, managing director at Affinity Mortgages, said borrowing at 90 per cent LTV had been “very tricky” for many of his firm’s clients.
However, Mr Lewis said he saw the stamp duty cut as a way for buyers to increase their deposits and thus lower their LTVs to around 85 per cent.
Adam Wells, director at Lloyd Wells Mortgages, agreed with a reduced number of lenders offering products at 90 and 95 per cent LTV, the increased threshold would “certainly” help first-time buyers in particular, who are looking to purchase a property above £300,000.
Under the previous stamp duty rules, first-time buyers purchasing a property at £500,000 or less paid no tax on the value up to £300,000, and 5 per cent on the portion between £300,001 and £500,000.
With the temporary increase in the nil rate band to £500,000, first-time buyers can further benefit from stamp duty savings, although they now find themselves on equal terms with other residential property buyers.
Indeed, Mr Wells warned the stamp duty cut could convince those who aren’t first-time buyers to enter the market, creating competition for property.
He added: “We could see a lot of people weighing up the cost of their early repayment charges and the cost of stamp duty”.
For Ms Dixon, the shortage of 90 per cent LTV mortgages available was also a concern.
She said: “I feel strongly that first-time buyers are the key to success in a housing market [but when] you restrict this lending, we may not see the results the chancellor was hoping for”.
Data from Moneyfacts shows there were 72 residential mortgages available at 90 per cent LTV on June 26, less than 10 per cent of what was available at the beginning of January (751 products).