Significant Drop In Mortgage Loans As Stamp Duty Holiday Came To An End In March

In a report shared by the Council of Mortgage Lenders (CML)

, the number of mortgage loans that were given against properties valued between 125,000 and 250,000 dropped by 70% in the month of April compared to the month of March 2012.

In the wake of these predictions, leading economists and property experts have pointed out that this fall is an indication of the fact that the property market is unstable and unreliable. They further predicted that the prices of the house will drop this year. In an effort to boost house sales at the bottom end, the government had exempted residential properties valued between 125,000 and 250,000 from paying a sales tax of one per cent.

In fact, the stamp duty holiday policy, which was initiated from the month of March in 2010 and came to an end on 31st March in 2012, allowed an average property buyer in the UK to save as much as 1,800. CML also clarified that the number of loans that were specifically given to first time home buyers between the months of March and April saw a drop by 48% in the month of April as the stamp duty policy came to an end.

The report by CML also stated that the total amount of mortgage lending in the month of April dropped by over 2 billion to 5.3 billion in comparison to March 2012. CML"s director general, Paul Smee stated that this drop was expected since the stamp duty exemption policy had come to an end. He also clarified that the mortgage lending to first time home buyers is not going to increase in the coming few months.

On the other hand, leading economist Howard Archer of Global Insight stated that he expects the home prices to drop by as much as 3% by the end of 2012.

In fact, he further warned that the current issues of the Eurozone could further bring the home prices down and discourage UK banks from extending mortgage loans.

However, if one were to look at CML"s recent report and research, they would notice that more than eighty per cent of people in the UK still wish to purchase their own home. This implies that in the long term demand for home or housing units will continue to exist. CML also stated that the total amount of mortgage loans lent in the month of April for home purchases was around 5.3 billion. This figure was down from 7.4 billion registered in the month of March 2012.

Therefore, people in the UK who are planning to sell their home can turn to a property buying company and seek their assistance for a quick property sale. However, in case they are not looking for a fast property sale then they can wait for a decent property buyer to come their way so that they get the right value for their property when they sell it.

by: Jhon Walker

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