Budget Disappointing For Housing And Homeowner Loan Markets
Yesterday (22nd April) saw the Chancellor of the Exchequer Alistair Darling deliver his budget speech, in which he announced that the UK Government was going to have to borrow a staggering £175 billion in an attempt to provide a boost to the economy and get the country out of recession, a loan which the UK tax payer will eventually have to repay.
Many experts within the housing and homeowner loan markets were hoping for some announcements which would offer help to potential home buyers and get the market moving again, as this is the area which is most likely to kick start some level of economic recovery.
However, most experts agreed that the budget, with one or two exceptions, was generally disappointing for the housing and homeowner loan sector as a whole and that much more could have been done to give a much needed boost to help the markets get going again. The asset backed security scheme from the government to buy up “toxic” loans from lenders, should free up some level of liquidity for banks to be able to offer new loans once more, but could have been extended further.
The current stamp duty holiday for property purchases under £175,000 was extended to the end of the year and more money was provided for the Mortgage Interest Support scheme and a shared equity scheme to help first time buyers get onto the market, but many claim that much more should have been done to help the loan markets, particularly to provide higher loan to value ratios on homeowner loans.
Robert Sinclair of the Association of Mortgage Intermediaries said “The extension of the stamp duty holiday is a sensible step but a bolder decision would have been to abolish stamp duty altogether. We really need more long term thinking to encourage buyers back into the market. We would have welcomed the reintroduction of Mortgage Indemnity Guarantees to encourage lenders to offer higher loan to values above 70 per cent, thus assisting both supply and demand in the mortgage market. The extensions to Mortgage Interest Support and the additional funding for shared equity schemes will help some individuals, but not the wider mortgage market.”
