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Stamp duty reduction prompts boost in housing demand

Estate agents up and down the UK have confirmed that the UK government's recent stamp duty reduction has prompted a significant boost in first-time buyer activity within the UK property market. While there is still some confusion regarding the conditions of the stamp duty holiday for first-time buyers there is no doubt it has caught the eye of would-be buyers in the short-term.

This is just the kind of move which the UK government has been hoping for because ultimately an increase in first-time buyer activity will lead to an increase in first-time buyer offers in the mortgage market. This is an area of the industry which has been sadly lacking of late and there have been concerns that in the short to medium term, funding for first-time buyers would stagnate at best and fall at worst.

It will be interesting to see what level of increased demand for UK property, from first-time buyers, actually converts into transactions and whether more competition becomes evident in the first-time buyer mortgage market. At the same time as looking to increase activity and the attractions of the first-time buyer property market the UK government needs to keep a tight control of mortgage terms to ensure that no additional risks, such as 100% mortgages, start to sneak back into the mortgage arena.

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