Average house purchase deposits reached a 14 month high in December, according to Mortgage Advice Bureau (MAB)’s National Mortgage Index. The firm says that the higher deposits can partly be put down to George Osborne’s stamp duty reform as buyers have been able to use funds previously put aside for stamp duty to take on a greater share of the cost of buying a home.
The typical mortgage applicant’s deposit in December was worth 30.7% of their house purchase price. This is the highest level of deposit recorded since October 2013 when the average was 30.9%.
Brian Murphy, head of lending at Mortgage Advice Bureau, commented: “December’s stamp duty announcement was an early Christmas present for many aspiring buyers. Having extra funds to put towards a deposit can not only help to limit borrowing commitments and give people more bargaining power. It can also allow access to better mortgage deals at lower LTVs, either at the point of purchase or when it comes to remortgaging at a later date.
“We are yet to see the extent that stamp duty savings are mirrored in higher asking prices, but after a period where credit conditions were squeezed by the new mortgage rules, this fairer tax regime has certainly fuelled buyer optimism about their purchase prospects for 2015,” he added.
Comparing the average purchase price against the average deposit and the old and new stamp duty rates, MAB found that the biggest stamp duty saving in December was recorded in East Anglia (4%), with a negligible change in Scotland which uses a different system.