You are here: Home - News -

Industry Budget response muted

by: Mortgage Solutions
  • 28/06/2010
  • 0
The market has given a mixed response to the emergency Budget, predicting that the housing market could be boosted by the general economic effects, but dangers still lie ahead.

Many in the industry have suggested that interest rates are set to stay low for much longer than forecast due to the fiscal squeeze. The centre for economics and business research (CEBR) has suggested that Bank rate could remain at 0.5% until 2012 because the Office of Budget Responsibility’s predictions for economic growth are too high.

In addition, the BSA is among many calling for the government to act quickly in its Budget pledge to review Stamp Duty. In the meantime, the government the confirmed that the two-year exemption for first-time buyers up to £250,000 will continue.

Robert Sinclair, director of AMI, said the Budget would have little immediate effect on the mortgage and housing markets, but the positive economic mood could boost the industry. He said that base rate remaining low and reduced inflationary pressures will prevent remortgagers flooding the market and allow banks to fund purchases and maintain confidence.

However, Sinclair added that the start of the Special Liquidity Scheme repayment was a real concern: “This will limit the amount of funds available for property purchase. There needs to be a plan to phase its withdrawal over a longer period than the existing short-term arrangements.”

Nevertheless, Andrea Rozario, director-general of SHIP, said the increase in VAT and changes to pensions could significantly boost the equity release sector as the older generation seek out additional sources of income for retirement.

And Liam Bailey, head of Knight Frank residential research, concluded: “The housing market was thought to be at significant risk from measures in this Budget. In reality, the changes seemed to be carefully considered and the certainty created by the announcement will serve to underpin the market.”

Related Posts

There are 0 Comment(s)

You may also be interested in

Read previous post:
AIFA director-general hunt begins in earnest

Applicants looking to fill the director-general role at the Association of Independent Financial Advisers (AIFA) being vacated by Chris Cummings...