Nevertheless, this is hardly the panacea the industry was looking for and the lack of liquidity has turned off the flow of remortgages with alarming speed. Add in the demise of the first-time buyer market and the knock-on effects become obvious.
And to make matters worse still, buy-to-let is no longer supporting first-time sellers either, with product withdrawals and rate changes happening on a daily basis.
Figures from Moneyfacts.co.uk show that in August 2007 there were 3,662 buy-to-let products on the market. Last Friday there were 584. Without first-time sellers there are no second-time buyers, second-time sellers, third-time buyers and so on.
Mortgage Strategy has never been one for scaremongering but if the liquidity crisis isn’t tackled soon there’s a danger the housing market will grind to a halt.
While we welcome last week’s proposal by the Bank of England to buy mortgage portfolios rather than taking them as collateral for cash, expertise is needed to make it work. But in a period when defaults and repossessions are rising sharply, now’s not the time to go back to school.
And it’s certainly not the time for Prime Minister Gordon Brown to visit his pals in the US. After all, we have already waved goodbye to Morgan Stanley, Bear Stearns and now Lehman Brothers, among others.
Conservative shadow chancellor George Osborne’s plan to get the market moving by scrapping Stamp Duty for first-time buyers is sound and should be considered. The stakes are high and if Brown wants any chance of staying in Number 10, which seems unlikely, he must act quickly.