The Chancellor of the Exchequer delivered his fourth Budget this afternoon, designed to help those who aspire to own their own home.
Bien Media client, Mark Harris of broker SPF Private Clients, gives his take on it: ‘The Help to Buy initiative should provide a significant boost for the housing market. Effectively, a Government-backed MIG (mortgage indemnity guarantee) will enable lenders to offer high loan-to-value mortgages while mitigating their risk.
‘We have been calling for an extension of the MIG scheme for some years as something that would make a real difference to first-time buyers, and the fact that the Government is supporting £130bn of mortgages over three years is excellent news. From next year, lenders will be incentivised to make more mortgages available for those with deposits of between 5 and 20 per cent, which should result in cheaper mortgage rates even though the Government has said it won’t be involved in the pricing. If lenders are serious about boosting their business levels, this is the perfect way of doing so and it should be of real assistance for first-time buyers in particular.
Interest-free equity loans
‘The extension of interest-free equity loans to those who are not first-time buyers and on new-build properties worth up to £600,000 will enable many more people to move up the housing ladder. We welcome the news that this will be launched from next month as there really is no time to lose. This is a massive boost to house builders as well, which is good news for the economy. It is perhaps a shame that older homes were not included in the scheme as new-build properties don’t appeal to everyone but someone buying an older property can still access the mortgage guarantee.
‘Help to Buy will not be available to landlords, which is no surprise. There are enough first-time buyers and second steppers struggling to buy without the money available being snapped up by landlords. It is also not available to those requiring interest only, or those without a minimum deposit of 5 per cent, which is sensible. This is not reckless lending.
‘The Budget really will help those who aspire to own their own home. We would welcome an extension of the ‘successful’ Funding for Lending Scheme, as mentioned by the Chancellor, as it is already making a difference to mortgage availability and pricing. Combined with these proposed measures, overall it was a very positive Budget for home ownership.’