Stamp duty fuels a mortgage high

BORROWING HITS RECORD AMID BUBBLE FEARS

THE Government’s stamp duty holiday is having an “insane” impact on the housing market, experts claim.

The Bank of England said yesterday a record £11.8billion of net mortgage lending in March was “driven” by what had been the scheduled ending of the tax break that month.

Instead, Chancellor Rishi Sunak used his March Budget to extend the suspension – meaning buyers of homes in England and Northern Ireland up to £500,000 don’t pay any duty – until June.

But concern is mounting that the measure is fuelling an unsustainable property price bubble.

Andrew Montlake, of mortgage

broker Coreco, warned the latest home loan surge “shows the insane effect of the stamp duty holiday on the property market”. He added: “When borrowing is as extreme as this, it never tends to end well.”

Laith Khalaf, financial analyst at broker AJ Bell, said low interest rates, the stamp duty holiday and a big shift to home working had provided a

“heady cocktail for the property market”.

He added: “When interest rates look like they can only head in one direction, it’s particularly dangerous.”

Gross mortgage lending reached a record £35.6bn in March, partly offset by £23.1bn of repayments.

While people are borrowing more on mortgages, households are also paying off everyday debt and saving more.

The mountain of savings grew by £16.2bn in March to stand at almost £1.7trillion, despite the average savings rate being just 0.49%.

Experts believe this pent-up firepower could turbo-charge the UK’S economic recovery if households ramp up spending.

DEMAND No let-up in rush to buy