In order to help first time buyers and respond to consumer group pressure, in 2005 the chancellor doubled the stamp duty threshold .
Yet this increase is not enough to compensate for increasing house prices, with the percentage of first time buyers in 2005 paying the tax increasing from 48% to 56%, so say the Council of Mortgage Lenders latest monthly statistics.
85% of the people moving home in August paid stamp duty, in contrast to 74% a year earlier.
The CML is concerned about the situation for first time buyers, as house prices continue to rise and mortgage rates have been going up as well.
First time buyers constituted only 35% of the market in August, the lowest proportion since the CML started its current survey in April 2005.
Moreover, properties are getting more expensive.
Your average first time buyer mortgage remained at 90% of the property value in August, yet income multiples went up to 3.27, up from 3.24 in July and 3.08 in August 2005.
Moreover, the percentage of income first time buyers spend on their mortgage interest payments went up to 17.1%, the highest since February 2005, with first time buyer mortgage size going up twice as fast as first time buyer incomes.
In spite of the threat of interest rate increases to follow, fewer people took out fixed rate loans .
Fixed rate mortgages still constitute 60% of new loans, well below the peak of 76% in November and December 2005.
On the other hand, tracker rate mortgages now make up 25% of new loans, the highest proportion on record.
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85 Percent of Home Movers Affected by Stamp Duty
Wed, 11 Oct 2006
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