House prices rise again and mortgage applications hit 12-year high, says Halifax

HOUSE prices have risen again in September growing at their fastest rate in more than four years new data from Halifax shows.

And the bank says it received more mortgage applications in July, August and September than at any time in the last 12 years.

Russell Galley, managing director at Halifax said: "Across the last three months, we have received more mortgage applications from both first-time buyers and homemovers than anytime since 2008."

The rush of people applying for mortgages comes after the restrictions on moving during the pandemic were lifted and after the chancellor Rishi Sunak introduced a six month stamp duty holiday .

House prices in September were 7.3% higher than the same month last year, a rate of growth not seen since June 2016.

They were also 1.6% higher than August as the property market continued to bounce back from the impact of coronavirus and monthly house prices jumped 1.6% in July and 1.7% in August.

The average house is now £249,870, an increase of nearly £4,000 on the previous month.

What is stamp duty?

STAMP duty land tax (SDLT) is a lump sum payment anyone buying a property or piece of land over a certain price has to pay.

Up until July 8, most house-buyers in England and Northern Ireland had to pay stamp duty on properties over £125,000.

This was temporarily increased to £500,000 until March 31, 2021 in the government's mini-Budget in July 2020.

The rate a buyer has to fork out varies depending on the price and type of property.

Rates are different depending on whether it is residential, a second home or buy-to-let, or whether you're a first-time buyer.

The usual system in England for residential properties means:

  • First-time buyers pay nothing on properties below £300,000 (and relief available on properties of up to £500,000)
  • You pay nothing if the property costs below £125,000
  • You pay 2 per cent if it is worth between £125,001 and £250,000
  • You pay 5 per cent if between £250,001 and up to £925,000
  • You pay 10 per cent if it is between £925,001 and £1.5million
  • You pay 12 per cent on anything over £1.5million

For second homes or buy to let properties:

  • 3 per cent on purchases up to 125,000
  • 5 per cent on purchases between £125,001 and £250,000
  • 8 per cent on purchases above £250,001 and £925,000
  • 13 per cent on purchases above £925,001 and £1.5 million
  • 15 per cent on purchases above £1.5 million

Stamp duty rates are different in Scotland and Wales.

Mr Galley said: "Few would dispute that the performance of the housing market has been extremely strong since lockdown restrictions began to ease in May.

"There has been a fundamental shift in demand from buyers brought about by the structural effects of increased home working and a desire for more space, while the stamp duty holiday is incentivising vendors and buyers to close deals at pace before the break ends next March."

Prime Minister Boris Johnson yesterday announced plans to help first-time buyers on to the property ladder with a new 5% deposit scheme.

Mr Johnson promised to "turn Generation Rent into Generation Buy" speaking at the Conservative Party conference but there has been no detail on how the scheme will work or when it will be available.

Many first-time buyers have struggled to land a mortgage after banks pulled many of the deals designed for those with a smaller deposit.

What help is out there for first-time buyers?

GETTING on the property ladder can feel like a daunting task but there are schemes out there to help first-time buyers have their own home.

Help to Buy Isa – It's a tax-free savings account where for every £200 you save, the Government will add an extra £50. But there's a maximum limit of £3,000 which is paid to your solicitor when you move. These accounts have now closed to new applicants but those who already hold one have until November 2029 to use it.

Help to Buy equity loan – The Government will lend you up to 20% of the home's value – or 40% in London – after you've put down a 5% deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.

Lifetime Isa – This is another Government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards their first home. You can save up to £4,000 a year and the Government will add 25% on top.

Shared ownership – Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25% to 75% of the property but you're restricted to specific ones.

"First dibs" in London – London Mayor Sadiq Khan is working on a scheme that will restrict sales of all new-build homes in the capital up to £350,000 to UK buyers for three months before any overseas marketing can take place.

Starter Home Initiative – A Government scheme that will see 200,000 new-build homes in England sold to first-time buyers with a 20% discount by 2020. To receive updates on the progress of these homes you can register your interest on the Starter Homes website.

Buyers have rushed to take advantage of the stamp duty holiday which means they pay no property tax on homes under £500,000.

The Bank of England said approvals for home loans in August were at their highest for 13 years.

Nationwide also found house prices grew at their fastest rate in four year in September, up by 5% on the same month last year.

But there are concerns that this growth will be affected by the end of furlough and support for mortgages and loans being scaled back at the end of October.

Mr Galley said:"It is highly unlikely that the housing market will continue to remain immune to the economic impact of the pandemic.

"As employment support measures are gradually scaled back beyond the end of October, the spectre of increased unemployment over the winter will come into sharper relief.

"While it may come later than initially anticipated, we continue to believe that significant downward pressure on house prices should be expected at some point in the months ahead as the realities of an economic recession are felt ever more keenly.”

House prices are set to fall by nearly 14% next year as the property market feels the impact of coronavirus and the stamp duty holiday come to an end.

You've finally scraped enough money together for a deposit, but how do you find the best mortgage deal for your first home? We round-up the best rates currently available for first-time buyers.

Get a foot on the property ladder as house prices boom with our top tips.

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