UK mortgage approvals have hit a two-year high as investors rush to beat the 1 April stamp duty deadline.
According to new figures from the Bank of England, mortgage lending rose £1.4 billion from December to £13.9 billion in January.
The Bank’s Money and Credit report showed that the number of loan approvals for house purchase was 74,581 in January, compared to an average of 70,221 over the previous six months.
The number of approvals for remortgaging was 42,228, compared to an average of 40,306 over the previous six months.
Richard Sexton, director of chartered surveyor e.surv, said: “Short and sharp, a buy-to-let blitz is lifting house purchase approvals to a two-year high. Landlords only have a few months left before the tax changes in April, when more punitive stamp duty charges on new purchases will come into play. We are seeing a last-minute lift in lending as landlords push through their purchases before this deadline.”
Stamp duty will rise by 3% for landlords and second home owners from 1 April as part of the government’s efforts to dampen the buy-to-let market and free up property for first-time buyers.
Under the changes, the stamp duty on a £250,000 buy-to-let property will rise from £2,500 to £10,000, while the rate for a £400,000 property will more than double from £10,000 to £22,000. The amount of tax relief landlords can claim on properties is also set to fall from April 2017.
Sexton said that with wage growth above the rate of inflation buyers also had more to spend, while mortgages with record low rates offered plenty of options for those seeking finance, including buyers with only small deposits.
“The wider global context will also make its mark. As talk of Brexit heightens, and sterling starts to slip against the euro and dollar, overseas investors may be re-encouraged to buy into Britain’s ‘safe-haven’ property market – which could add a further element of competition to an already crowded market.”
John Phillips, group operations director of Spicer Haart and Just Mortgages, said: “The recent hike in mortgage borrowing over the last six months has resulted in an increase in loan approvals for both house purchase and remortgaging. It is possible that this increase has been driven and boosted, in part, by the impending increase in stamp duty, and this has contributed to the current upward pressure on mortgage approvals.
“However, it is clear that lending increases as buyers’ confidence increases. This rise in mortgage borrowing could also be a result of market fundamentals including consumer confidence, strong real income gains and, with mortgage rates expected to fall again, it is likely to remain on an upward trend.”
