A UK mortgage broker has warned that the residential property market will continue to slow unless the stamp duty threshold is raised.

Mortgage broker My Mortgage Direct (MMD) believes that the 3% stamp duty tax applied to mortgages in the £250,000 - £500,000 bracket, is holding the market down.

MMD Joint Director Cath Hearnden said: "Evidence suggests that the recent increase of the lowest stamp duty threshold to £120,000 has made negligible difference to hard pressed first time buyers.

"But it is the next threshold, which is causing the market to stagnate. Paying 3% of any purchase price over £250,000 means buyers have to find at least £7,500 to hand over to the Government in order to move up the property ladder. And they are understandably digging in their heels."