Some help for first-time buyers and those struggling with mortgage repayments raises quiet cheer
One of the more welcome corners of today’s budget was the announcement that £250 million has been earmarked to help first-time buyers – although they will have to pay the money back.
The Government will offer five year interest-free loans to up to 10,000 buyers in order to help them raise the necessary deposit. This equates to an average of £25,000 per head.
This will be good news for some buyers who are struggling to raise a mortgage, but it will only go so far. Statistics from the Council of Mortgage Lenders show that there were 10,500 first time buyers in January alone. They borrowed an average of £114,285 each, with a deposit of £28,571.
However, January is always the slowest month of the year for house sales, and the number of first time buyers was down 29% compared with December 2010 and down 12% compared with January 2010. Clearly first-time buyers have been badly squeezed by the credit crunch, the banks are being overly parsimonious, and the Government will still need to do a lot more to get mortgages flowing properly again
Another measure that warrants modest approval is the decision to extend financial support for mortgage interest for 2011/2012. This means £110 million worth of support for hard-pressed homebuyers, many of whom will be trade unionists. Continuing the measures put in place by Labour has meant that we have not seen the rush to repossess that was so damaging during the Major recession of the early 1990s. Indeed, CML statistics show that repossessions in 2010 were 24% less than in 2009, whilst mortgage interest arrears had fallen by 13%.
On a gloomier note, there was no new money to help social housing. The shortage of housing overall and social housing in particular continues to blight the lives of too many families in the UK and the TUC is deeply sceptical of the Government’s plans in this area.