Government 'must help homebuyers'

Monday, 10 March 2008 8:56 PM

The government must offer assistance to homebuyers in the UK housing market, a leading financial comparison website has demanded.

With the publication of its inaugural report, Tougher Times in the UK Residential Mortgage Market, Moneyfacts.co.uk is calling on the government to address a range of concerns.

These include issues arising from the continued increase in the stamp duty paid by homebuyers over the last decade and problems with the security and simplicity of long-term borrowing.

One of the key issues raised by the organisation is the potential of assistance for first-time buyers, who are increasingly denied access to the property market by constrained affordability and the burden of stamp duty.

While the minimum threshold was raised by £5,000 to £125,000 in 2006, this was regarded as a token gesture and will have done little to ease problems for aspiring buyers.

Since this time lending criteria have been tightened, following the credit crunch, with 100 per cent loan-to-value mortgages disappearing, forcing first-time buyers to save more for deposits.

As a result Andrew Hagger of Moneyfacts declared: "[We are] calling on the government to increase the threshold to £200,000 or as an absolute minimum that borrowers should only pay duty on the margin above £125,000.

"Without positive action from the government in the Budget on Wednesday, there is real danger that getting on to the property ladder will be nothing more than a dream for the vast majority of would be homeowners."

Moneyfacts is also calling for protection on long-term borrowing, to make it more flexible to real world situations.

"While it is possible to insure against illness and unemployment, there is still the potential issue of marriage breakup which could result in a change of mortgage requirements.

"If a clause was introduced to cover uninsurable life events such as marriage breakdown whereby the borrower could switch to a more suitable mortgage (with the same lender) without being subject to an expensive redemption penalty, such innovation would perhaps make longer term deals more appealing," explained Mr Hagger.

The organisation hopes to see these innovations included in chancellor Alistair Darling's first Budget, which takes place tomorrow, and is expected to include provisions for long-term mortgages and a new grading of mortgage-backed investments to draw a close on the credit crunch.

Tags:
• uk property news