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More homes changed hands in the last three months of 2020 than in any quarter in the past 13 years, underlining the scale of the resurgence in housing market activity following the relaxation of lockdown restrictions and the stimulus of the stamp duty holiday

The number of housing transactions in December, at 137,200, was 34 per cent higher than in the same month in 2019 and 14 per cent higher than in November, according to non-seasonally adjusted HM Revenue & Customs figures published on Thursday. 

The December figure brings the quarterly total to 378,860 transactions — a level unsurpassed since the third quarter of 2007.

The stamp duty holiday, which waives the charge on the first £500,000 of any home purchase, saving buyers up to £15,000, has been a big factor in driving market activity to its recent peak, housing market experts said. 

The latest quarterly transactions total was 9 per cent higher than that preceding the 2016 introduction of a new stamp duty surcharge on buy-to-let and second homes, which caused a “rush to buy” among those keen to complete their purchase ahead of the three-percentage-point charge. 

Lucian Cook, director of residential research at estate agent Savills, said the growth trend was likely to persist in the coming months, before the stamp duty holiday ends on March 31. 

“These numbers reflect the surge in interest which we saw over the summer and autumn months, as people reassessed their housing needs following the first lockdown. There is little doubt that the stamp duty holiday will have added to a sense of urgency among buyers and that the March 31 deadline will mean numbers rise further in the coming months.” 

The resurgence in activity is also bringing mortgage lenders back to higher-risk areas of the market they had spurned amid the economic uncertainty of the pandemic. 

First-time buyers with a deposit of 10 per cent have seen their mortgage options widen in the past two months. This week, Santander re-entered the market for 90 per cent loan-to-value (LTV) mortgages for the first time since May, offering two five-year fixed rate mortgages for first-time buyers. 

The 90 per cent LTV mortgage is particularly important for first-time buyers, who may struggle to raise higher deposits and have faced long-term rises in house prices. 

The number of 90 per cent LTV mortgage deals offered by lenders has more than doubled from 88 at the beginning of December to 215 this week, according to data from finance website Moneyfacts. 

However, the revival has a long way to go before it returns to pre-Covid levels. At the start of March 2020, there were 779 mortgage deals at 90 per cent LTV. 

These low-deposit mortgages also come at a cost, as they carry much higher interest rates than lower-LTV home loans — and recent rates on higher LTV loans are substantially higher than last year. The average interest rate on a two-year fixed-rate mortgage at 90 per cent LTV is 3.61 per cent, according to Moneyfacts; a year ago it was 2.57 per cent.

Andrew Montlake, managing director at mortgage broker Coreco, said lenders were still cautious over their ability to handle potentially high levels of demand with a largely home-based workforce, but were nonetheless rediscovering some of their appetite for the 90 per cent LTV market. 

“You only have to look at what’s happened to house prices in the past 12 months and a lot of the lenders’ fears haven’t come to pass. After the stamp duty deadline we’ll probably start to see lenders increase their availability for 90 per cent LTV mortgages again and there may be a bit of a price war. We could see rates come down.”

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