BUDGET 2011: Support for Mortgage Interest Scheme extended
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Chancellor George Osborne has revealed in today’s Budget that the government will extend the Support for Mortgage Interest Scheme until January 2013.
Osborne predicts this will reduce mortgage arrears for 100,000 jobless homeowners.
The 13-week waiting period and £200,000 limit on eligible mortgage capital will now remain in force for new working age SMI claimants until January 2013.
He also confirmed plans for a £250m scheme for first-time buyers.
The First Buy scheme is designed to help 10,000 first-time buyers purchase a newly built flat or house.
The buyer will have to put down a 5% deposit, while the government and home builder would both put up 10%in the form of a low-cost loan from the government and the builder, resulting in a 25% deposit.
Osborne also revealed that Stamp Duty will be based on the mean value of property in a portfolio not the bulk cost.
Bob Hunt, chief executive of Paradigm Mortgage Services, says: “Overall the Budget measures were as expected with the government unable to give too much away because of the nature of the economy and the course it is steering with regard to its cuts strategy.
“Specifically in terms of the housing and mortgage markets, I welcome the help afforded to first-time buyers in terms of the five-year interest-free deposit loans available for the purchase of new homes. It offers a boost not only to the property market, as first-timers are the lifeblood of the sector, but also in terms of a potential increase in housing construction jobs.
“Anything that stimulates the first-time buyer sector should be applauded as it is these purchases at the start of the chain which often mean a further five or six housing transactions taking place.
“To my mind the focus on helping first-timers with their deposits is also right given most individuals would have no problem with their mortgage affordability, the difficulty has been in finding a deposit in order to access mortgage finance. If it can get anywhere near 10,000 first-time buyers onto the ladder then it will have been a scheme worth pursuing.”
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Readers' comments (2)
Brian Melling | 23 Mar 2011 1:42 pm
Whilst this scheme may help first time buyers, it will not help the housing market recover in any way.
If FTBs were helped to buy, say 2 bedroom terraced, the owners of that house could then afford to buy their 3 bed semi, who could then buy their 4 bed detached...etc. Now this would help FTBs, home movers, the country's economy and of course, mortgage brokers and estate agents.
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A Surveyor | 23 Mar 2011 6:10 pm
This will only help the banks, who have funded the builders, and the builders. Every new build purchase is a "dead purchase" and does nothing to move the market forward. It also makes it difficult for previous first time buyers to move on, and distorts the market making it difficult for FTB's to acquire a property needing some work as they often used to. This then places all the profit from "doing up" a property in the hands of speculators/builders. It also has a knock on effect on the repossession market by removing FTBuyer competition allowing investors to keep bids low.
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