ResidentialAug 11 2020

'Little evidence' stamp duty cut affecting activity

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'Little evidence' stamp duty cut affecting activity

There has been “little evidence” of a spike in new mortgage activity resulting from the stamp duty cut, according to Trussle.

Data from the online mortgage broker found that mortgage applications for buyers with a deposit of more than 10 per cent remained consistent with levels seen before the coronavirus.

For those with less than 10 per cent, such as many first time buyers, the broker warned they risked being locked out of the market altogether due to the lack of mortgage products available.

Additionally, the broker found that buyers with larger deposits had not significantly increased their budgets since the cut in stamp duty, with next-time buyers increasing the price of their purchase by 4 per cent, and first-time buyers by less than 1 per cent.

Miles Robinson, head of mortgages at Trussle, said: “There’s been a lot of focus recently on how the stamp duty holiday could be prompting a ‘mini-boom’ in the market.

"While this is promising, our data suggests that actually the cut is having a minimal impact on buyers’ behaviour and we’re perhaps just seeing a level of pent up demand following the lockdown.

“We are continuing to see an increase in remortgages from existing homeowners. This may be an indication that many are choosing to stay put and remortgage on their current property, rather than move to another house, despite the stamp duty holiday.”

In his summer statement, chancellor Rishi Sunak confirmed an immediate increase in the residential stamp duty threshold from £125,000 to £500,000 until March 31, 2021.

Scotland and Wales followed by announcing a temporary increase in the thresholds at which tax will apply on residential property transactions.

Dominik Lipnicki, director at Your Mortgage Decisions, commented: "I think that whilst the stamp duty [cut] may well have not resulted in increases in sales, what it may well have done is stabilised the market and prevented a crash".

He added: "Ultimately however, the scheme has not been in place for long enough to really see the result".

Mortgage brokers told FTAdviser last month that they had seen an influx of enquiries after the government announced the stamp duty cut.

Within a day of the announcement on July 8, Rachel Dixon, mortgage adviser at RH Dixon told FTAdviser 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.

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.

However, many warned borrowing at 90 per cent LTV had been “very tricky” for clients.