The change of government has brought the fiscal situation sharply into focus. Events in Europe have made clear the potential dangers of putting off difficult decisions and the new administration has already confirmed it will make efficiency cuts of £6bn this year.
But the big fiscal squeeze will begin with the Budget in June. This will act as a drag on the speed of economic recovery and slow the tentative pick-up in the housing market.
But at least the Bank of England has welcomed plans to fix the public finances, which means that interest rates can remain low for longer. This will support the market, with many borrowers continuing to benefit from low interest rates for some time. And we appear to have avoided the much higher levels of mortgage arrears and possessions we saw in the early 1990s, although risks remain
But the market is likely to remain difficult, particularly for first-time buyers without large deposits. Lenders continue to face funding challenges and the prospect of the withdrawal of official support schemes next year is hanging over the industry.
So credit availability is likely to remain restricted for some time but there have been some signs of increased mortgage availability, with a higher number of higher LTV products coming on the market and rates falling slightly.