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Budget 2008 Fails First Time Buyers

Budget 2008 Fails First Time Buyers

Category: Mortgages

Updated: 31/10/2008
First Published: 13/03/2008

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

In response to the this year's budget, Richard Farr, Director of the Association of Mortgage Intermediaries, comments: "Today's Budget is a missed opportunity to help home owners, and those aspiring to property ownership. We would have expected the Chancellor to address the challenging market conditions and revise stamp duty. Our research also shows that borrowers remain to be convinced by long-term fixed rate mortgages."

A Missed Opportunity for Borrowers
"Alistair Darling's decision to abolish stamp duty for first time buyers who own less than 80% of their shared ownership home is a positive first step. As are his plans to introduce a new shared equity scheme for key workers who can only afford 50% of their home. However, neither of these schemes will help the substantial number of ineligible applicants who are also struggling to purchase their first home.

"Last week, Halifax published a report showing that the cost of stamp duty for first time buyers had risen by 83%. The Government hasn't increased stamp duty thresholds in line with property prices, and the duty is increasingly becoming a stealth tax. Stamp duty is such a burden that it could cause the Government to fail in its ambition to achieve 75% home ownership."

Longer Term Fixed Rate Mortgages
Today, along with the Budget, the Treasury published a report called 'Housing Finance: analysis and proposals', which looked at the feasibility of promoting long term fixed rate mortgages. AMI is calling for a wider public consultation on longer term fixed rate mortgages.

Richard Farr added:
"One of the unique advantages of the UK economy is that it has a flexible, mobile workforce, supported by an innovative and dynamic mortgage market which already includes a range of longer-term fixed rates. Our research has left us in no doubt that borrowers are yet to be convinced that long term fixed rates are a good deal for them. The Treasury should promote the competitive, diverse and flexible mortgage market, which already exists in the UK, instead of exclusively focusing on 10, 20 or even 25 year fixed rate mortgages.

Gold Standard Securities
"The securitisation market will be partially helped by the Bank of England's announcement yesterday to extend its £10bn offer of three-month loans against a wider than normal range of collateral.

"However, we would have liked to see Darling clarify his proposal to introduce a gold standard for mortgage-backed securities in his Budget today, instead of proposing a Working Party on the gold standard. AMI sees this as one option to stimulate trading in the mortgage backed security market, allowing a wider range of complementary funding for lenders which should facilitate enhanced competition and wider choice for borrowers. However, we are concerned that the kitemark is not restricted to just prime mortgages and should include all types of asset that have a better than average performance, such as buy-to-let lending."

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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