Kick Start The UK Housing Sector
The Chancellor of the Exchequer, has just launched a ?1.8bn set of measures to kick start the housing sector in his pre-budget report. The set of measures includes extra cash for social housing and more support for People unable to make the repayments of their mortgages.
But, will it be adequate to tempt back the Home Buyers and give normal People the confidence they need to start to Buy Homes once more? Because, to have the confidence to do that, we all need to know that, if things go awry for us in the future, at least we’ll be able to get someone ready willing and able to Buy my House for a sensible value.
Responding to the latest news that Home repossessions were at a 9 year high, the Chancellor launched a package of measures to give help for Home owners in financial difficulties, so ensuring that repossession is always a last option.
The government are also widening their mortgage rescue scheme under which Home owners will be able to sell their Home to a housing association and then rent it back for an affordable rent. Otherwise, they could just sell a share of their house. There’s also an extension of the system to help Families at risk of losing their Properties because of arrears with second mortgages.
There will be also a much improved set of measures to help People who are experiencing difficulties to manage their mortgage repayments. At the moment, no benefits are paid to cover mortgage interest costs until 39 weeks after the wage earner loses his or her job. This will now be reduced to only 13 weeks. At the same time the maximum mortgage covered by the scheme will go up to ?200,000.
An extra ?775million will also be spent this year and next on new and modernised social Properties, and whilst this is a very understandable & compassionate action to take, it must be remembered that it could well decrease the number of Home buyers in the market, and this can only have a negative effect on Home values.
Nonetheless 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 1st time buyers who have to find much larger deposits than before. 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 dry up, and therefore cutting down Home prices. This will, they predict, force more Home owners into negative equity, causing more repossessions, and in turn a faster fall in Home values. Of course, any such problem won’t be isolated to the Home sales UK market. The pain will pass into supplier industries and through them into the remainder of the economy.
The most pessimistic forecasts predict a total standstill or even a net negative figure for Mortgage Lending during 2009, with only a very slim improvement in 2010.
On a more positive note, there’s hope due to the very fact that the banks are experiencing such profound problems themselves. This is causing many cash rich people and companies to enter the Home sales UK market, and to put their funds into Properties. They’re doing this even though they know that house values are still tumbling, but they’re thinking that such falls will be temporary, and besides, it’s better to lose a few percent, rather than risk losing the lot in a Bank collapse. These people and their irrepressible “We Buy Homes” message offer one of the very few positive patches in the present Financial Crisis.
Posted by Carlos Sagastume on November 30, 2008. Filed under HUD Homes.
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