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The Stamp Duty holiday for first time buyers came to an end on 25 March 2012 and thresholds returned to a 1% levy on purchases over £125,001 to £250,000, 3% on purchases between £250,001 and £500,000 and 4% on purchases between £500,001 and £1,000,000, for all buyer types.
The effect of this on the housing market will possibly only be truly reflected once the traditional spring and summer peak of buying and selling activity has passed, although my opinion is that this could have a negative impact upon sales figures, as it certainly is not a benefit to have to part with more cash when purchasing a property in excess of £125,001.
Add to this the continuing squeeze on loan-to-value ratios and first time buyers requiring more of a deposit than was necessary three or four years ago, and it is easy to see why the property market is still rather stagnant.
In addition to the concerns for first time buyers, existing mortgage holders are also beginning to find their options a little more limited. A number of bigger lenders have announced that they are going to be increasing their Standard Variable Rate (SVR) - Halifax is moving from 3.50% to 3.99% from 1 May, Bank Of Ireland (UK) is moving from 2.99% to 3.99% in June (and has already confirmed a further increase in September from 3.99% to 4.49%) and Clydesdale and Yorkshire Bank from 4.59% to 4.95%.
Many homeowners have chosen to remain on their lender’s SVR in recent years (after previous fixed or tracker rates over specific periods ended) as the SVR, in many cases, represented a reduction in the interest rate they paid. Now that SVRs are on the increase, it is perhaps becoming more apparent to mortgage borrowers that the time may have come to explore their options.
The good news is that some lenders have recently introduced some specific ‘SVR beating’ fixed and tracker rates in an attempt to target this valuable sector of the mortgage market. For example, at the time of writing (subject to some fairly strict criteria) Woolwich were offering fixed rate deals in the region of 3.49% over two years.
If you have already received notification from your mortgage lender that your SVR is due to increase, or if it already has and you are concerned about future increases, it may be worthwhile reviewing your mortgage options sooner rather than later.
Your home may be repossessed if you do not keep up repayments on your mortgage. Think carefully before securing other debts against your home.
Property Finance Consultant
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