While stamp duty will now not be payable on shared ownership properties until buyers own 80% of the equity in their home, the Government knows the take up of these schemes is tiny compared to the wider housing market. This is not a good move to help first-time buyers or the mortgage market.
Around 61% of first-time buyers currently pay stamp duty and both the Council of Mortgage Lenders (CML) and the National Association of Estate Agents (NAEA) had called for changes to be made to stamp duty in the run-up to the Budget. Lenders and borrowers alike were disappointed.
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Darling did state that borrowers should take out longer-term fixed rate mortgages and that he would be working to this end with the lending industry. However, this is nothing new and, in fact, 25-year fixes are available – the Nationwide celebrated the anniversary of its 25-year fix just this week. The main issue is that borrowers do not choose them over a more competitive rate.
Commenting on the Budget, Ross Bowen, managing director of Connells Survey & Valuation, said: Long term fixed rates are already available to borrowers but they choose not to take them. Increasing the choice of long term fixed rate mortgage products wont encourage borrowers to fix for two decades. Darlings focus on this dodges the real problems in the mortgage market rates are too high for borrowers to afford and tightened criteria means limited access to funds for those with poor credit histories Where is the government’s commitment to getting first time buyers onto the property ladder?
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The CML believes the modest announcements relating to shared equity schemes for key worker first-time buyers, while potentially welcome, are unlikely to provide any short-term relief to affordability and entry costs for first-time buyers to the housing market, where a stamp duty reprieve would have done so.
Michael Coogan, CML director general, commented: “There was little of immediate concrete substance for the housing or mortgage markets in this Budget. While there may prove to be benefits in the long term, the Chancellor ducked the pressing nature of some of the issues that are facing the markets right here and now.
The industry is now calling for an interest rate cut in April.
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