Lenders try to entice the reluctant with cash

THE reintroduction of stamp duty should intensify pressure on mortgage lenders to offer discounts and other incentives to tempt reluctant buyers, writes Maria Scott. Some are giving money away to soften the blow. The bill for stamp duty on a typical first-time buyer house in the South-east is about pounds 600.

From Wednesday, The Mortgage Corporation (TMC) is offering new customers up to pounds 200 towards legal fees and up to pounds 200 towards valuation fees. Those unable or unwilling to fund their deposit out of their own resources will also be given a type of insurance policy, worth about pounds 100, to guarantee the deposit between exchange and completion.

Would-be borrowers are being offered a four-year fixed-rate loan by TMC with an interest rate of 10.4 per cent until 31 July 1996. TMC is also reducing its standard variable mortgage rate from 11.75 per cent to 10.99 per cent. A pounds 395 arrangement fee for the deal can be added to the mortgage.

Citibank will pay up to pounds 400 of stamp duty for first-time buyers in a package that includes two years' free unemployment cover. The mortgage with this deal has a rate of 10.73 per cent, but will move in line with the average rate charged by the 10 largest societies. There is an arrangement fee of pounds 295. Leeds Permanent Building Society is expected to launch two new mortgage deals next Wednesday. Abbey National is continuing to promote its two fixed- rate deals for first-time buyers.