Ninety per cent of first-time buyers are likely to pay stamp duty on their homes by 2008, according to Alliance & Leicester Mortgages. The bank forecasts that nine out of ten (90%) first-time buyers will have to pay the tax within just three years based on current trends, with this hitting 95% by 2011, making the first step onto the property ladder more and more difficult.

Recent research conducted by Alliance & Leicester revealed that stamp duty is a financial burden for the first-time buyer. In fact, one in four (25%) first time buyers who bought a property in the last 12 months, found that the cost of stamp duty was a major obstacle to getting onto the property ladder.

The nil-rate threshold of £60,000 has not been raised since 1993 when the average first time buyer house price was £44,000. Today the average price is £145,408 and the percentage of first time buyers affected by stamp duty has trebled in the last seven years. Whereas in 1997 just over 25% of first-time buyers paid stamp duty, 75% of first-time buyers pay stamp duty today.

To help combat stamp duty woes, Alliance & Leicester is launching a new mortgage product primarily aimed at the first-time buyer and designed to help them cover the cost of stamp duty.

The buyer will receive £1,500 cashback for loans between £25,000 - £100,000 and £2,500 cashback for loans between £100,001 - £250,000, with the cashback linked to the size of the loan.

Other benefits of the 'first step' Mortgage include:

• Fixed rate of 5.99% for 3 years
• No product fee
• Free valuation (refunded upon completion)
• There is an early repayment charge of 3% of the outstanding balance if redeemed before 31 May 2008.

Stephen Leonard, Director of Mortgages, Savings & Investment Products at Alliance & Leicester, said: "Alliance & Leicester’s research findings show that the cost of stamp duty is a real issue for first-time buyers."

"More needs to be done to address the concerns and burdens of first-time buyers. For this reason, I have written to the Chancellor, Gordon Brown, to urge him to consider scrapping the tax for first time buyers. Stamp duty was never intended to be a prohibitive tax and with the first-time buyer market activity at a 20 year low, it seems this group of people could do with a helping hand."

"The new mortgage product from Alliance & Leicester called the First Step Mortgage will go some way to help first-time buyers with the cost of stamp duty and should appeal to those who also want a competitive rate."