The government will guarantee mortgages up to 95% of a home’s value
Property industry experts have reacted positively to Rishi Sunak’s budget announcement on Wednesday, while outlining the need for more sustainable reforms.
The Chancellor pledged to “stand behind home buyers”, extending the stamp duty holiday to June. The point at which stamp duty will be paid will remain at £250,000, double its standard level, until the end of September. The budget also included assurance that the government will guarantee mortgages up to 95% of a home’s value.
House builders, Persimmon (5.96%), Barratt Developments (5.7%) and Taylor Wimpey (5.41%) made up three of the top four risers on the FTSE 100 following Chancellor Rishi Sunak’s budget announcement on Wednesday afternoon. Today follows a recent surge by UK house builders as they continue to prop up the index of the UK’s top companies.
Commenting on the Budget and its implications, David Ross, managing director at Hometrack, said:
“Our analysis shows that the 95% mortgage scheme for first-time buyers would support borrowers predominantly in lower value markets, particularly in the northern regions of England and across Scotland, parts of Wales and Northern Ireland, which lenders should factor into their considerations. The high cost of homes in southern England makes using a 95% mortgage much harder, and mortgage regulations compound this with limits on maximum loan to income levels.
While Richard Donnell, research director at Zoopla, praised the combined impact of Sunak’s policy on the housing market, he said it would do little to address the sector’s longer-term structural issues
“Taken together, the stamp duty holiday extension and the 95% mortgage guarantee scheme provide continued support for the housing market as we help the economy respond to the pandemic – they address barriers to movement and access to home ownership but will have limited impact on shifting the longer term fundamentals of the housing market,” Donnell said.