The Council of Mortgage Lenders has welcomed the integrated package of housing market measures but warns that the lack of mortgage funding is still a major issue.
The trade body says that until more funding is available there is still a long way to go before long term stability can restored to the UK housing and mortgage markets.
But the CML says it welcomes the announcement of reforms to Income Support for Mortgage Interest next spring, with the waiting time for new claims cut from 39 weeks to 13 weeks and the upper ceiling for eligible mortgages raised to £175,000.
Michael Coogan, director general of the CML, says: “For borrowers who will be eligible to meet all or most of their mortgage interest payments under ISMI, these reforms will make it much easier for lenders to exercise forbearance until benefit payments begin.
“The mortgage rescue proposals for some borrowers who would otherwise become homeless, while also welcome, will help only perhaps 6,000 households over two years. Lenders must – and do – see repossession as a last resort.
CML members have committed to a range of measures designed to ensure that borrowers who may find themselves in difficulty have good access to advice services that can help them.
The aim is also to alert the borrowers in good time to changes in their payments to allow them time to budget or to contact their lender to discuss alternative payment options if necessary.
While it commented that the shared equity scheme would be useful for some first-time buyers it warned that the proof of the pudding would be in its uptake which it predicted would be muted, though it could build as buyers see the benefit of the interest-free equity loan.
And it says the Stamp Duty threshold rise to £175,000 was something of a curate’s egg – good in parts but the CML estimates that around half of all housing transactions will still end up paying the tax.
Coogan adds: “Over time, the housing and mortgage markets will recover. But in the meantime, the situation is painful for some home-owners, and problematic in terms of balance sheet management for lenders too.
“We continue to see the funding problems in the mortgage market as a fundamental bar to meaningful housing market recovery. We believe that the focus of the government’s attention should be at least as much on market funding as on today’s consumer-targeted measures.”
“We will continue to work closely with the government on effective implementation of this package, and on other measures which can be brought forward under the Crosby review.”