Portman Building Society shows that in the following months after the rise in the exemption threshold from April 2005, British homeowners paid almost £60 million more in stamp duty than in the same period before April. Portman Building Society also advises that even though the government raised the threshold to £120,000, the change made minimal impact at a time of rising house prices, considering that the average property stands close to £200,000 and the typical first-time buyer purchase amounts to £145,000.
Matthew Wyles, group development director at Portman Building Society commented that "Stamp duty is no more than a form of advance capital gains tax - paid long before buyers have enjoyed any of the financial benefits achievable from home ownership". First-time buyers should be liberated from this unjust tax.
Newcastle Building Society is hoping to help first-time buyers by launching new mortgage deals aimed specifically at graduates.
Steve Urwin, the marketing manager from Newcastle Building Society advises they understand the issues first-time buyers face so they launched the 100 per cent mortgage and the guarantor mortgage at the society. Mr Urwin says that there are parents and grandparents who want to help their offspring become first-time buyers. This is made possible through sharing the initial cost of a mortgage, with the first-time buyers taking on increasing responsibility as they start getting paid more.
The new first-time buyer mortgage offerings include a deal that offers 100 per cent loan-to-value on properties valued up to £200,000.
The guarantor mortgage is available to first-time buyers between the ages of 21 and 35 who earn an annual salary of at least £15,000.
The prospect of further increases in the base rate has prompted a record uptake of fixed-rate home loans by first time buyers. In January, 85% of first-time buyers took out a fixed-rate deal - the highest proportion on record, according to the Council of Mortgage Lenders (CML). Among house movers 70% opted for a fixed-rate deal. The average interest rate of these deals was 5.27%, following the 3 rate rises since August 2006. "Each month it seems that the prospect of another interest rate rise is balanced on a knife edge," said the CML's director general Michael Coogan. "More and more borrowers are protecting themselves against this risk and choosing the certainty of fixing their monthly mortgage payments," he added. Such speculation is likely to further fuel the increasing consumer appetite for fixed-rate deals on mortgages & remortgages, Michael Cooke, senior partner at homeowner loans specialist comments "of course, homeowners often need to raise further funds from time to time, and for those who have already secured a fixed rate, a remortgage often does not make financial sense compared to a secured loan which can often serve their needs much better by keeping that great fixed rate mortgage deal in place, yet still utilising available equity to secure a to provide the funds required." Despite the higher cost of borrowing, house prices are still climbing around the UK. The Communities and Local Government Department (DCLG) reported recently that house price inflation in January had risen to 10.9%, pushing the cost of the average house up to ?205,286. However, many believe that the market may, eventually, cool off. The Royal Institution of Chartered Surveyors (RICS) reported that last month new enquiries to estate agents from potential buyers fell for the third consecutive month. "The interest rate rises have started to worry would-be buyers with many concerned that they will be unable to meet mortgage repayments," said RICS spokesman, Ian Perry. "Affordability for many will continue to decrease in the coming months as the January rise, and further rises take effect."
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