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This could be the year of economic stimulation – Hunt

by: Bob Hunt is chief executive of Paradigm Mortgage Services
  • 03/02/2020
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This could be the year of economic stimulation – Hunt
It is very early days in 2020 but I get the sense that this could be the year of economic stimulation, and that one of its prime beneficiaries might well be the UK’s housing and mortgage markets.


Already, from both a political and economic perspective, the ducks appear to be waddling into something resembling a row and, within a short space of time, we might have some significant change designed to give the economy a boost.

January’s inflation figures, at a three-year low of 1.3 per cent marked the fifth consecutive month below the Bank of England’s two per cent threshold.

That certainly set the dogs running with many commentators speculating it could lead the way to a base rate cut by the Bank of England’s Monetary Policy Committee (MPC).

That did not materialise, although two members of the MPC did vote for a cut, and one suspects that should economic productivity continue to bump along the bottom, then the pressure to give the economy a much-needed shot of adrenaline will increase.

Even though the UK has left the EU, trade negotiations will go on throughout this year and perhaps the feeling is that action is warranted now, rather than leaving it too late.


The landlord’s friend?

Added to this, of course, is the Budget in March, which as is the case for all Budgets these days, is being viewed as an opportunity for the government to add some much-needed and requested stimulus to the UK housing market.

The most obvious way to achieve this may be further stamp duty changes, and given the noises Boris Johnson was making last summer, it would be very surprising if we did not see cuts to stamp duty below £500,000 and over £1m.

Might private sector landlords also hope for a cut to the extra three per cent charge on purchases? Well, they might hope but whether they get it, is another thing entirely.

I have no doubt that such a move would stimulate purchase activity a considerable amount, but is this a government which, at this very early stage, wants to seen as the landlord’s friend?

Recent administrations have not, but I read an article which suggested one of Boris Johnson’s strengths was his ability to distance himself from what has come before, and in that sense perhaps the landlord community’s hope might turn into something more concrete.


Budget to stimulate

It is likely that the Budget will be positioned as one designed to encourage economic activity and stimulate UK businesses; to provide confidence to UK workers and perhaps give them incentives to move ahead with big-ticket items.

Coupled, with any future base rate cut – however tenuous it is to product rates offered – this might be enough to provide a kick-start for many would-be purchasers and existing borrowers.

Who among us would not wish for this?


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