The Government's 2009 Budget and the Expectations of Housing Market Players

In spite of the government intention to kick the stagnated housing market, nothing happened. The Government's 2009 Budget left the mortgage industry players disappointed. Industry figures unanimously keep insisting on further Government reforms of the tax. Specialists say that the Government should have switched from the 'slab' system to the system of increments, so that the stamp duty tax works like income tax. The trouble is that the extension of the Stamp Duty holiday was a small part of what needs to be done to lower barriers, so that it would become easier to entry to the housing market. The current system of taxation is unfair towards all the buyers, especially those who are most likely to find they fall into the 3% tax band. The Association of Mortgage Inter¬mediaries said that the Government made a step forward to recovering the housing market extending the Stamp Duty holiday, but it is vitally important to abolish the tax altogether to stimulate buyers to come back onto the market. Robert Sinclair, director of AMI, added that the Government should have mentioned such crucial measure as a re-invention of Mortgage Indemnity Guarantees. This step is aimed to provoke lenders to offer higher LTVs, thus increasing both supply and demand in the mortgage market. The Council of Mortgage Lenders warned the Government that the extension the Stamp Duty holiday would be of weak effectiveness, though regarded as the modest measure. Michael Coogan, director general of the trade body, commented that the recovering of the mortgage market was strongly connected with restoring the availability of mortgage credits. New asset-backed securities guarantee scheme could help to launch the mortgage credit system. Peter Williams, executive director of the Intermediary Mortgage Lenders Association appreciated much at least the introduction of guarantees for mortgage-backed securities. He was confident that over the next few months we would get to know whether this measure was successful or not. The supplement essential measure could be the availability of the scheme for non-bank lenders who form a hefty part of the mortgage market. Perhaps both the extension of the Stamp Duty and introduction of asset-backed securities guarantee scheme would stir up the stagnated mortgage funding and the wider housing market.