First time buyers in the UK still struggling to get on property ladder, figures indicate

The UK property market is stable but runs the risk of stagnation because first time buyers are still struggling to secure a mortgage unless they have a deposit of at least 25%, it is claimed.

The latest monthly report from the Council of Mortgage Lenders shows that 51,000 mortgages were agreed for house purchases in September, a rise of just 1,000 compared with August.

Real estate experts are constantly warning that first time buyers are the key to a sustainable recovery in the property market yet these figures show they are still not able to get on the housing ladder in the kind of numbers that are needed.

‘Although the recent bounce-back in house purchase activity is holding up, we remain some way below what might be called normal levels of transactions.  We have stability in the mortgage market but at the risk of stagnation,’ said CML economist Paul Samter.

There are also concerns that the temporary stamp duty holiday that comes to an end in the New Year could affect first time buyers. The figures from the CML show that a third of first time buyers escaped paying stamp duty in September as a result of the government’s £175,000 nil-rate threshold.

There were 6,200 first time buyer loans for properties between the old threshold of £125,000 and the temporary threshold of £175,000, representing 32% of the 19,700 loans to first-time buyers in September.

In addition, 7,800 first-time buyers, some 40%, bought properties valued below the £125,000 original threshold.

Since the concession was introduced last September, an estimated 132,500 house purchase mortgage transactions have escaped paying stamp duty which otherwise would have incurred the tax at 1%, some 27% of the 486,400 house purchase loans in the period.

‘The stamp duty concession has played a modest role in underpinning confidence in the housing market. As the end date for the stamp duty concession approaches, we may see sustained levels of activity at the lower end of the market in a traditionally quiet time. But the corollary will be lower activity in early 2010 as transactions are bunched in 2009,’ said Samter.


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