IT may be a few months before the real impact of the increased, and incremental, stamp duty rates on secondhand houses worth over £150,000 can be assessed, but TSB Bank has decided to lessen the potential impact for its new borrowers by paying any stamp duty in excess of the previous rate of 6 per cent on amounts up to the value of the mortgage.

TSB provides the following example of how the new offer works: a buyer decides to purchase a house worth £200,000 and takes out a mortgage of £100,000. Had the stamp duty regulations stayed the same, with just 6 per cent duty, the borrower would have paid £6,000 in duty on the mortgage portion of his, purchase (i.e. £100,000 at 6 per cent = £6,000). Because stamp duty has been increased to 9 per cent, the amount of duty, payable on the mortgage portion of the loan is now £9,000. The bank is offering to pay the difference between that £9,000 and the £6,000 the buyer would have paid before the change in Stamp Duty rates - i.e. £3 000.

The TSB has not put a time limit on this unusual marketing campaign, which other lenders are describing as "unsustainable", but which mortgage brokers have described as very welcome, since the higher the percentage of mortgage to purchase price, the higher the amount of stamp duty the TSB will pay. The broker in this case was referring to a house loan the equivalent of 80 or 90 per cent of the purchase price. Someone buying a £200,000 house with a 90 per cent mortgage would be obliged to pay the same £18,000 stamp duty, but this time the mortgage portion of that duty is a whopping £16,200. Under its new offer the TSB's share of that mortgage portion of stamp duty is now £5,400, the difference between the £16,200 due and the £10,800 the buyer would have paid if the duty had remained at 6 per cent. Aside from the stamp duty refund, the TSB also announced last week that it had reduced its variable rate for new borrowers for the first 12 months to APR 7.1 per cent, which translates to £6.54 per thousand borrowed. New borrowers should note however that the TSB's regular variable rate, to which they will revert after the first year, is currently 7.2 per cent APR or £7.75 per thousand borrowed.