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Rescue package misses target

The mortgage industry says the Government’s £1bn rescue package and stamp duty holiday do not go far enough as they fail to address the liquidity problems.

This week, the Government set out a £1bn package of help for first-time buyers and people facing repossession alongside a stamp duty holiday which will see the threshold property value increased from £125,000 to £175,000 from now until September 2009.

Intermediary Mortgage Lenders Association executive director Peter Williams says: “Taken together, the various measures announced will diminish some of the effects of the market downturn but this package will not stop them.”

He says it is the liquidity crisis that should be addressed and says: “This will only help a limited number of people in a limited way. Firm action to tackle the big issue is vital.”

Brentchase Financial mortgage specialist Mike Fitzgerald says: “Something is better than nothing and I would imagine that Alistair Darling would have liked to have done more but the Government has no revenue and no ideas.”

John Charcol senior technical manager Ray Boulger says: “Raising the stamp duty threshold to £175,000 but doing nothing for people buying at higher prices will do very little to help the housing market.

“Announcing in advance that the exemption will last for a year is another mistake. It means those buyers who might have been tempted to buy now in the light of these changes will see that there is no hurry.”

Council of Mortgage Lenders director general Michael Coogan says: “The whole situation is painful for some homeowners and problematic in terms of balance sheet management for lenders, too. We continue to see the funding problems in the mortgage market as a fundamental bar to meaningful housing market recovery.” mortgages

Government’s property proposals

  • £300m for 10,000 first-time buyers who will be offered a free five-year loan of up to 30 per cent of the property value subsidised by housebuilders

  • £200m for 6,000 mortgage rescue packages for the most vulnerable homeowners facing repossession. They will be offered the chance to sell part or all of their property to a Government body which will then rent it back to the former homeowner or they will be offered an equity loan from that body

  • £100m for reforms to the Income Support for Mortgage Interest scheme. The period until support is allowed has been cut to 13 weeks and the threshold has been raised to cater to those with a £175,000 mortgage

  • £400m for spending on social housing providers, including registered social landlords and councils, to deliver 5,500 more social houses over the next 18 months

  • The threshold for stamp duty payments has been raised to £175,000 from £125,000 before a 1 per cent levy is charged

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