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Labour sidesteps the biggest issue

We’ve said it before and we’ll say it again – the so-called mortgage rescue plan announced by the government last week was a wasted opportunity. A year-long Stamp Duty holiday for loans up to £175,000 is little more than a political sticking plaster. All this proposal will generate are more media headlines.

What was Prime Minister Gordon Brown thinking of? He even had the audacity to launch his reforms in the London Borough of Ealing, where just nine flats and no family homes would be eligible for the change.

And even elsewhere, how will knocking a maximum of £1,750 off the price of property make a difference without competitive mortgages? Even in these difficult times, around 19,000 borrowers are buying their first homes each month. Will the Stamp Duty change encourage more buyers to enter the market? Mortgage Strategy thinks not.

And the rest of the proposals? A £300m shared equity scheme. Some £200m of assistance for those facing repossession. An extra £100m for reforming Income Support for Mortgage Interest, shortening the period before ISMI is paid from 39 weeks to 13. And £400m for social housing providers, with the aim of delivering 5,500 more social houses in the next 18 months.

While Mortgage Strategy welcomes the last two proposals, if the government was truly committed to action it would do something more practical.

Liquidity is at the heart of the housing crisis – it always has been and always will be. As the Council of Mortgage Lenders is at pains to point out, funding problems present a fundamental barrier to the market’s recovery.

As we exclusively revealed online last week, the publication of Sir James Crosby’s report into mortgage funding is to be brought forward. Although his interim report said little, an early announcement of the renewal or extension of the Special Liquidity Scheme would help to resolve market uncertainty. Roll on the end of the month.

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