The Chancellor of the Exchequer, has just put forward a £1.8bn bundle of measures to help the property sector in his pre-budget report. The bundle of measures includes extra money for social housing and increased support for People struggling to pay their mortgages.
But, will it be adequate to tempt back the Home Buyers and give everyday People the confidence they need to begin to Buy Homes once more? After all, to have the confidence to do that, we all want to know that, if things go badly for us in the future, at least we’ll be able to get someone ready willing and able to Buy my House for a reasonable value.
Responding to the latest reports that House repossessions were at a 9 year record, the Chancellor put forward a series of measures to provide help for House owners in financial difficulties, with the aim of ensuring that repossession is always a last option.
The government are also extending their mortgage rescue scheme under which House owners will be able to sell their House to a housing association and then rent it back at a manageable rent. On the other hand, they could just sell a share of their home. There’s also an expansion of the system to cover House Owners at risk of losing their Homes because of problems with second mortgages.
There’s also a much improved bundle of measures to help People who are experiencing difficulties to cover their mortgage repayments. At the moment, no benefits are paid to cover mortgage interest costs until 39 weeks after the salary earner loses his or her job. This is now reduced to only 13 weeks. At the same time the maximum mortgage covered by the scheme will go up to two hundred thousand pounds.
An additional seven hundred and seventy five million pounds will also be spent this year and next on new and modernised social Homes, and whilst this is a very reasonable & compassionate action to take, it must be born in mind that it may well reduce the number of House buyers in the market, and this can only have a negative effect on House values.
Nevertheless many experts said too little had been done to kick start the House Sales UK market itself. They say the package won’t do enough for would be 1st time buyers who have to find much larger deposits than in the past. They also warn that House Sales UK are in danger of entering a deadly downward spiral, because lack of mortgage availability is causing sales to dry up, and therefore cutting down House prices. This will, they predict, compel more House owners into negative equity, giving rise to more repossessions, and in turn a faster fall in House values. Of course, any such problem won’t be isolated to the House sales UK market. The pain will cascade into supplier industries and through them into the rest of the economy.
The most pessimistic forecasts foresee a total stagnation or even a net negative figure for Mortgage Lending during 2009, with only a very slender improvement in 2010.
On a more positive note, there’s hope due to the very fact that the financial institutions are having such profound problems themselves. This is causing many cash rich individuals and companies to enter the House sales UK market, and to put their funds into Homes. They’re doing this even though they know that house values are still falling, but they’re thinking that such falls will be temporary, and anyhow, it’s better to lose a few percent, rather than risk losing the lot in a Bank collapse. These people and their irrepressible “We Buy Homes” message provide one of the very few positive patches in the current Crisis.