Today, George Osborne delivered that package intended to find £83bn of savings from government spending budgets.
Mortgage Solutions brings you reaction from intermediaries around the UK. Find out what the key mortgage firms think and what it could mean for your business.
And add your comments below.
Melanie Bien, director of Private Finance
The planned cuts to social housing will put huge pressure on the private rented sector, but with lending in the buy-to-let market severely restricted, it will be difficult for the private rental sector to fully step into the breach.
A surge in demand will be difficult to satisfy when investors are struggling to get finance on competitive terms. Buy-to-let lenders are few and far between, even with the return of Paragon to the market recently. Criteria remains tight, sizable deposits are necessary and fees are high. More lending is essential to meet the likely increased demand.
Already, rents are rising significantly. More pressure from an increased number of tenants will push them higher – good news for a few landlords perhaps but hardly a sustainable situation in the longer term.
And will the building of 150,000 new affordable homes be frustrated by the new localism in planning rules? Plans to put local people in charge are all very well but this could be self-defeating.
Alan Lakey, principal, Highclere Mortgage Services
The most obvious impact will be the knock-on effect of losing half a million jobs. This will reduce spending and have major implications for mortgages and property values.
Supply & demand suggests a fall in property prices (exacerbated by the forecast base rate rises and the FSA’s MMR plans). This will also dampen hopes of an immediate stockmarket recovery and reduce investor interest.
The welfare cuts may increase interest in income protection and private medical insurance – assuming that enough advisers remain, post RDR, to assist consumers.
Steve Foulsham, technical services manager, BIBA
In 2007 the previous Government committed to £2.15 billion over three years 2008 – 2011 on flood spending. The £2 billion over four years 2011- 2015 is a step backwards and we are anxious that flood cover may not continue to be available following these cuts.
BIBA will continue to work with our insurance broker members, insurers and Government to provide access to appropriate insurance for those affected by flooding.
Jonathan Cornell, communications director, First Action Finance
Whilst George Osborne and the current coalition will be blamed by many for the cuts, in my mind the fault lies firmly with the last government and in particular, Gordon Brown, who liked to talk about prudence but based his outrageous spending decisions on the Del Boyism of “this time next year, we’ll be millionaires.”
The Comprehensive Spending Review has slashed many budgets through the public sector however there are some crumbs for comfort. The decision that the temporary changes to Income Support for Mortgage Interest which were due to expire in January 2011 will be extended for another year will be welcome news to homeowners struggling to pay their mortgages.
Ray Boulger senior technical manager at Charcol
The extension of the ISMI scheme was pretty much expected. But what the government should do is calculate ISMI on an individual basis. Some people are getting too much and over paying a little of their capital, others are getting too little, so ISMI is not doing the job its intended to do.
It shouldn’t be beyond the ken of man and with a little bit more effort to pay the right amount to people. Perhaps lenders could put in a claim once a month, en-bloc, to ease the administration process?
