Mortgage search volumes held “steady” following the tapering of the stamp duty holiday, due to the rising number of 95% loan to value mortgages and continuing property tax relief, according to MoneySuperMarket data.
The price comparison says general mortgage searches fell 5.2% fall in between the final two weeks of June and the first 14 days of July, two weeks days after the end of the stamp duty holiday.
It adds first-time buyer searches slipped by 1.2% over the same period.
On 1 July, the stamp duty nil-rate threshold was reduced from £500,000 to £250,000 until the end of September.
From 1 October, the threshold will return to £125,000 – or £300,000 for first-time buyers purchasing a property worth up to £500,000.
The MoneySuperMarket survey notes that in the six months since January, the number of 95% LTV mortgages has jumped from 13 to 177, a rise of 1262%.
It says: “The growing availability of 95% LTV mortgages is making getting on the housing ladder more realistic for many Brits and is thought to be one of the main drivers keeping numbers steady, despite widespread concerns that the end of the stamp duty holiday could lead to a major fall in mortgage interest.”
The report found that the average mortgage amount searched for is £213,000, with two-year fixed-rate deals the most popular among 40% of customers, followed by five-year fixes at 28%.
It says that 51% said chancellor Rishi Sunak’s move to cut stamp duty last July to revive the housing market was a “helpful intervention”.
However, 49% say the move has “fuelled a housing bubble that will burst”.
This view was felt most strongly by buyers in the South East, 59%, East Anglia, 51%, and London, 50%.
As house prices have risen over the last year, 46% of respondents feel that property is a sellers’ market, with 17% believing it is a buyers’ market.
UK house prices slipped 0.5% fall in July, following the record highs seen in June, according to Nationwide data this week.
However, annual house price growth was still significant at 10.5%, with the average UK home costing £244,229 in July.
MoneySuperMarket mortgages expert Jo Thornhill says: “The stamp duty proved very popular with many homebuyers, so it’s only natural many feared its end could lead to a major dip in homebuying interest.
“However, our research reveals that though there’s a been a slight fall in general and first-time buyer searches, interest in homebuying remains steady. A big factor in this is undoubtedly the new temporary stamp duty threshold of £250,000 which means that buyers who are able to complete their purchases before October can still make significant savings.
“Another major factor is the increasing availability in 95% LTV mortgages. This is a positive trend which is making it easier for younger buyers to get on the housing ladder.
“But it’s important to remember the larger the deposit you put towards your home the better, as 95% mortgages can come with risks.
“For example, if you buy a home with a 95% mortgage, house price uncertainty means that if you chose to sell it in the short term, you could end up in negative equity.
“If you can afford it, try to buy with as big a deposit as you can afford. It will bring your borrowing ratio down and could give you access to lower mortgage rates.”
