In the six months since January 2021, the number of 95% loan-to-value (LTV) mortgages has increased by 1262%, from 13 to 177, according to data collected by MoneySuperMarket.
Looking at values and product type, MoneySuperMarket finds the average amount searched for is £213,000, while 2-year fixed (40%) and 5-year fixed (28%) are the most popular mortgage types for Brits.
Just over half (51%) of homebuyers viewed the tax holiday as a helpful intervention that kept the housing market moving in uncertain times.
However, the remaining 49% think it fuelled a housing bubble that will burst – a belief felt most strongly by buyers in the South East (59%), East Anglia (51%) and London (50%).
In comparison, just over a fifth of respondents (22%) believe that the stamp duty holiday has driven a housing boom that will continue. A further quarter (25%) felt the scheme was unfair – particularly for buyers that missed out.
Age had a bearing on sentiment with younger buyers more likely to view the stamp duty holiday as a welcome intervention, with three fifths (60%) of 18- to 24-year-olds and over half (55%) of 25- to 34-year-olds, supporting the initiative.
With property prices rising in many parts of the country, nearly half (46%) of respondents feel that we are in a sellers’ market, as opposed to only 17% believing it’s a buyers’ market.
Jo Thornhill, mortgages expert at MoneySuperMarket, said: “The stamp duty proved very popular with many homebuyers, so it’s only natural many feared its end could lead to a major dip in home buying interest.
“However, our research reveals that though there’s a been a slight fall in general and first-time buyer searches, interest in homebuying remains steady.
“A big factor in this is undoubtedly the new temporary stamp duty threshold of £250,000 which means that buyers who are able to complete their purchases before October can still make significant savings.
“Another major factor is the increasing availability in 95% LTV mortgages. This is a positive trend which is making it easier for younger buyers to get on the housing ladder.
“But it’s important to remember the larger the deposit you put towards your home the better, as 95% LTV
mortgages can come with risks. For example, if you buy a home with a 95% LTV mortgage, house price uncertainty means that if you chose to sell it in the short term, you could end up in negative equity.
“If you can afford it, try to buy with as big a deposit as you can afford. It will bring your borrowing ratio down and could give you access to lower mortgage rates.”