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Bank reports eighth month of higher year-on-year lending

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Published: 2 May 2012 | Author: Bernard Clarke

Today’s Bank of England data showed that secured lending in March totalled £12.6 billion, somewhat lower than our provisional estimate of £13.4 billion for the month. Activity in March was buoyed by first-time buyers seeking to complete purchases before a deadline offering them exemption from stamp duty came to an end during the month. But the change in duty may have boosted lending to a lesser extent than originally anticipated.

Secured lending reported by the Bank was 10% higher than a year ago (our own estimate showed a 17% year-on-year increase). According to the Bank, March was also the eighth month in row of higher year-on-year lending.

The Bank reported secured lending for the first quarter of 2012 at £33.6 billion. That was 11% lower than in the preceding quarter, but an 11% increase on the same period in 2011 (£30.3 billion).

An increase in lending in the month was partly due to activity by first-time buyers wishing to complete their transactions before their threshold for stamp duty was lowered from £250,000 to £125,000 on 24 March.

Although house purchase activity has been relatively buoyant in recent months, the passing of the stamp duty deadline for first-time buyers may have created less of a spike in transactions than originally anticipated. That means that, while we may see a decline in transactions in the coming months – as activity by first-time buyers subsides temporarily – it may not be as pronounced as earlier expected.