When chancellor John Major took over the reins of government from Margaret Thatcher 18 years ago, Norman Lamont succeeded him. The result was Black Wednesday, when the UK pulled out of the European Exchange Rate Mechanism and 15% interest rates caused the mortgage market to grind to a halt.
It’s perhaps fitting then that when Tony Blair was succeeded by Gordon Brown, Alistair Darling in-herited the mess we’re in now.
This time it’s the global liquidity crisis that has the potential to bring the home buying process to a standstill. And while we’re a long way from seeing interest rates hitting 15%, there’s a danger that the first-time buyer and seller markets could collapse.
The squeeze has forced some lenders to pull back from the 95% LTV market. And now those willing to provide 90% LTV-plus deals are few and far between.
First-time buyers are the lifeblood not only of the UK mortgage market but also associated industries – from surveyors, valuers and estate agents to white goods suppliers, plumbers and decorators.
The average first-timer now pays Stamp Duty nearly everywhere in the South, so backing our four-year campaign to Step Up Stamp Duty to a starting threshold of £150,000 would be one small step towards kick-starting the market. Scrapping it for this class of borrower would be even better.
But with a rise in repossessions looming, perhaps Darling also needs to encourage some social responsibility from bigger lenders such as HBOS, Nationwide, Abbey, Lloyds TSB and Royal Bank of Scotland. The right tax break for the right reasons would be welcome news for everyone.