Budget 2013: The industry reacts
The Chancellor announced that he was in consultation with the Bank of England in regards to extending the Funding for Lending Scheme and also announced the new Help to Buy Scheme.
Peter Williams, executive director of IMLA, said: “Given that the slow momentum of the recovery seen in the mortgage market and despite the Funding for Lending Scheme, the government’s latest £3.5bn housing package – focussed on expanding FirstBuy and encouraging higher loan to value lending through the new Help To Buy mortgage guarantee – is welcome news for both lenders and borrowers.
“Both schemes run for three years and experience tells us it takes time to get programmes up and running.”
Williams praised the use of a guarantee as a sensible way of making good use of limited government resources and said he believed it should bring new activity to market.
However he cautioned that the stimulus could do more for house prices than housing supply.
Whilst the Chancellor was keen to encourage the housing market he also stressed the need for responsible lending.
This was welcomed by Andrew Doyle, chief executive of Crown Mortgage Management, who said: “The government has pledged to help families and new homeowners under the new mortgage guarantee for lenders and we agree with the Chancellor on advocating responsible lending for those who can afford a mortgage but don’t have the savings for a deposit.”
But Doyle also warned that whilst the today’s announcements were a move in the right direction he doubts that a silver bullet solution exists for the country’s economic problems.
Charles Haresnape, managing director of residential mortgages at Aldermore, praised the government for recognising the importance of getting the housing market moving.
But Haresnape did caution that the UK housing market is still plagued by underlying issues.
He said: “It may be that the government has to also consider more fundamental changes if it wants to get the housing market moving once again.”
Not everyone was keen to praise the government and its initiatives.
Angel Mas, president of mortgage insurance, Europe, for Genworth, said: “Using the Government guarantee for new high loan to value mortgages will expose the UK taxpayer to unnecessary liability – potentially a multi-billion pound loss if there was a late 80s/early 90s style property crash.
“It is extraordinary that – given the existence of capacity and expertise in the private mortgage insurance sector –the Government has not yet considered the involvement of private mortgage insurance in order to reduce the risk to the UK taxpayer.
“Given the role of irresponsible lending in the crisis this seems an oversight that puts the taxpayer at unnecessary risk whilst leaving the Government in the hands of the banks when it comes to ensuring prudent lending standards are maintained under any extended scheme.”