Chancellor Proclaims Considerable Support Package To Help UK Out Of Current Downturn
The Chancellor of the Exchequer, has just put forward a £1.8bn set of measures to relieve the property sector in his pre-budget report. The set of measures includes extra funds for social housing and improved help for People struggling to make the repayments of their mortgages.
However, will it be sufficient to bring back the Home Buyers and give everyday People the confidence they need to begin to Buy Homes once again? After all, to have the confidence to do that, we all need to know that, if things go badly for us in the future, at least we’ll be able to get somebody ready willing and able to Buy my House for a sensible price.
Reacting to the latest reports that Home repossessions were at a 9 year record, the Chancellor put forward a package of measures to give help for Home owners in financial difficulty, so making sure that repossession is always a final option.
The government are also expanding the mortgage rescue scheme under which Home owners will be able to sell their Home to a housing association and then rent it back at an affordable rent. Otherwise, they could just sell a share of their property. There’s also an expansion of the scheme to aid Home Owners at risk of losing their Homes because of arrears with second mortgages.
There is also a greatly improved set of measures to help People who are struggling to cover their mortgage repayments. Presently, no benefits are paid to cover mortgage interest costs until thirty nine weeks after the salary earner loses his or her job. This will now be reduced to just 13 weeks. At the same time the maximum mortgage covered by the scheme will go up to two hundred thousand pounds.
An additional seven hundred and seventy five million pounds will also be spent this year and next on new and modernised social Homes, and whilst this is a very reasonable & compassionate action to take, it must be born in mind that it may well cut the number of Home buyers in the market, and this can only have a negative effect on Home values.
However many experts said too little had been done to revitalise the Home Sales UK market itself. They say the package will not do enough for would be first time buyers who have to find much bigger deposits than in the past. They also warn that Home Sales UK are in danger of entering a serious downward spiral, because lack of mortgage funds is causing sales to disappear, and therefore cutting down Home prices. This will, they forecast, force more Home owners into negative equity, causing more repossessions, and in turn a faster fall in Home prices. Of course, any such problem won’t be limited to the Home sales UK market. The pain will cascade into supplier industries and through them into the rest of the economy.
The most pessimistic forecasts expect a total stagnation or even a net negative figure for Mortgage Lending during 2009, with only a very slender improvement in 2010.
On a more positive note, there’s hope due to the very fact that the financial institutions are having such profound problems themselves. This is encouraging many cash rich people and companies to enter the Home sales UK market, and to put their savings into Homes. They’re doing this even though they know that house prices are still falling, but they’re thinking that such falls will be temporary, and anyhow, it’s better to lose a few percent, rather than risk losing the lot in a Bank failure. These people and their irrepressible “We Buy Homes” message provide one of the very few positive patches in the present Financial Crisis.
Posted on: Monday, December 1, 2008 at 11:01 pm 
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