The end of the stamp duty holiday

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The stamp duty holiday has very much been a complicated subject.

On the one hand, the stamp duty holiday allowed people to move home which with the effects of the pandemic still in play it came at a very useful time as people reassessed their priorities and needs may have changed. Good examples being people who maybe worked in the major cities wanting to move out of those cities, people who lived at home with their parents being stuck in lockdown with them may have meant they wanted to get out – everyone had their own reasons.

On the other hand, it was not really needed. The market was buoyant anyway most likely because of the reasons listed above. It has probably also played a part in inflating house prices which has in turn made it even harder for first time buyers.

What have we noticed?

As we come to the end of the stamp duty holiday, it is easy to look back and have a look at what has happened.

  • We have noticed our average mortgage size has jumped. We are looking at nearly £100k more on average. However if we delve a little deeper, what we have actually noticed is that we have done more £450k plus mortgages than ever before. If we take those out (as those are the ones that typically account for £500k plus properties which are the ones to have benefit the most from the stamp duty holiday), our average is around £25-30,000 up. That increase of £25-30,000 is a significant jump especially for first time buyers as it means they now have to find an even bigger deposit.
  • First time buyers now seem to be wanting or having to extend the term of the mortgage even more. When I started as a broker around 10 years ago, 25-30 year term mortgages were the norm, we are now pretty much always looking at 35 year term mortgages. We are even seeing a few lenders bringing out 40 year mortgages.
  • The stamp duty holiday seemed to be taken advantage of mostly by those wanting to move home.

What happens next?

This is the big question. We seen some stats earlier in the year that said after the last stamp duty holiday, there was a lull of around 6 months in the mortgage market.

At the minute things do seem to have slowed a little. But that can quite easily be explained on the Euros and the school holidays. I think the next month will give a good indication of what to expect.

My personal opinion is that things will carry on ticking over. There are still a lot of people who want to move home or buy their first home. For those who did benefit from covid financially (ie those no longer needing to pay to commute etc) a lot will still have money they have managed to save which puts them in a good position for having a deposit in place.

Summary

The stamp duty helped a lot of people move home, it certainly helped us we are on target for our best ever year. But it also feels like it was not really needed and it could potentially have artificially inflated the housing market – although it will be interesting to see if there will be a house price drop. I am not 100% convinced there will be.

Hopefully house price rises will stop or at the very least slow down now to prevent any more first time buyers being priced out of the housing market.