The extended stamp duty holiday has contributed to the fastest rise of UK house prices in five years. The extension announced in the 2021 Budget statement prompted a resurgence of home-buying after the announcement, negating many financial experts’ fears that the market was heading for a downturn if an extension wasn’t granted.
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In fact, house prices hit a record high in April, the average sale price hitting just over £258,000, adding almost £20,000 since the market hit a rough patch during the first coronavirus lockdown in April of last year. The stamp duty land tax holiday only added to the rush in housing activity, the demand for housing far outpacing the supply available.
Demand is expecting to continue to rise
Despite plans for the stamp duty land tax holiday to be phased out in stages – in June and September – lenders are anticipating demand to continue at the same rate through the summer because even though the lockdown created many hardships, it had a few upsides.
Spurred on by the need for bigger and greener space, many people began house hunting for properties that would fit their needs. And since most households were able to increase their savings during the pandemic, it allowed people to have even more money up front for a deposit on their dream homes.
The newly announced mortgage guarantee scheme is expected to contribute to the increased housing market activity of the foreseeable future as well.
What’s the mood among mortgage lenders?
Mortgage providers are still cautious as they look to the future months and the possibility that an increase in unemployment at the end of the furlough scheme might contribute to a slowdown of house price growth toward the end of the year. But in the meantime, lenders are benefitting as much as they can until things change.
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