Robert Sinclair, director of the Association of Mortgage Intermedairies (AMI), said the housing market is showing signs of recovery but a further stimulus is required.
He added: “The Government should also carry out a full review of the Stamp Duty regime. At present, it both distorts the housing market and places a disproportionate burden on first-time buyers.”
Before the report, AMI’s submission to the Government called for it to increase competition in the mortgage market to avoid long-term consumer detriment.
It proposed the Government increase competition by bringing building societies and non-banking institutions back to lending by easing their capital and regulatory requirements
However, Sinclair was frustrated that the Chancellor did not seek to address the lack of competition more urgently
He explained: “The commitment to work through the Council for Financial Stability on Mortgage Backed Securities needs accelerating together with the promise to clarify the rules on covered bonds. We will continue to seek government support for our proposal to draw Building Societies and non-banking institutions back into lending.”
The CML also expressed disappointment that the current Stamp Duty “holiday” will cease at the end of this year.
The trade body believes more fundamental reform of this tax, which continues to distort the housing market, is still needed.
Another opportunity was missed, said the CML, as a low number of housing transactions are expected next year and it would have been possible for the Treasury to consider the introduction of revenue-neutral reform that would have removed market distortion.
The BSA added that extending the holiday would have provided much needed relief to many first-time buyers aspiring to get a foot on the housing ladder.
Adrian Coles, director general of the BSA, said: “Stamp Duty needs serious reform. We urge the Government to research how the system could be reformed to reduce the price distortions resulting from the current ‘slab’ structure of the tax.”
Both the CML and the BSA welcomed the announcement by the Chancellor that help with mortgage payments for working-age borrowers on income support will be maintained at current levels for the next six months.
The CML pointed out that payments of income support are helping around 100,000 households stay in their homes, and a further 113,000 older home-owners are receiving help with their mortgage through pension credits.
Coles said the Support for Mortgage Interest scheme provided an effective alternative to other Government support for struggling homeowners.
“The Government should also extend the scheme to borrowers suffering a reduction in income and further review the scheme to provide greater certainty to borrowers in difficulty,” he said.
Coles agreed with Sinclair that the Government had not addressed the distortions in the savings and mortgage markets caused by wholly and part Government-owned banks.
He added: “It is time Northern Rock’s 100% Government guarantee on all deposits was removed and steps should be taken to ensure National Savings & Investment (NS&I) does not unfairly distort the savings market.”
