First-time buyers aren’t getting a lot of breaks. Despite the slight relaxation of lending criteria last autumn the best deals are still only available to those with big deposits.
And now the Stamp Duty holiday has ended their problems have been exacerbated. The threshold has come back down from £175,000 to £125,000.
The reaction to this has been predictable. Mortgage approvals fell in December for the first time in more than a year – a sign the housing market recovery may struggle to keep up momentum.
Lenders granted 59,023 loans to buy homes compared with 60,045 in November, according to the Bank of England. Sellers will have to adapt, probably by offering to fund Stamp Duty near the threshold.
At first glance it is staggering that chancellor Alistair Darling didn’t extend the Stamp Duty holiday. But on closer inspection it’s clear that he can’t give the property industry any more breaks – we’re out of cash.
To put it in perspective, the UK went bust in 1976 running a budget deficit of 6% of gross domestic product – last year the deficit topped 12%.
This year, the interest on our debt will cost £42.9bn. That’s more than we spend on defence and not much less than the education budget. We are too deeply in debt to support first-timers. And much as we’d like to see the government support the mortgage industry, perhaps it shouldn’t.
Our debts need to be paid as coming generations won’t thank us for mortgaging away their future.