Following the introduction of the Mortgage Guarantee Scheme and stamp duty holiday extension in this afternoon’s Budget, the industry have been discussing whether housing supply can keep up with demand.
Rachel Springall, finance expert at Moneyfacts, said: “Those looking for a mortgage will be elated by the news that the government will be tackling the lack of 5% deposit mortgages, as this area of the market has deteriorated over the past year to just a handful of lenders with deals that would only suit certain customers.”
Unlike the Help to Buy Scheme, the plans will not be restricted to first-time buyers or new-build homes, instead all borrower types where the properties have a value of up to £600,000 and will run until the end of 2022.
However, Springall questions whether the expected rise in demand as a result of the scheme will be able to keep up with the supply.
Miles Robinson, head of mortgages at Trussle, looked to the decision to extend the stamp duty deadline until 30 June.
He said: “Many within the industry had feared the end of the scheme could lead to a large scale collapse of housing transactions, as some buyers had been relying on the savings from the tax break to complete on their property purchase.”
In addition, Robinson believes the announcement that there will continue to be nil rate stamp duty on house purchases up to £250,000 from July will stabilise the housing market in the coming months.
However, he said that while the extension gives current buyers more time to benefit from the tax relief, Robinson is urging the government to consider adopting a more tapered ending to the scheme from September.
Robinson added: “This would guarantee the stamp duty holiday to buyers who have received a mortgage offer before a certain date.
“Not only would this prevent a shock to the market, it would also shield buyers from the damaging costs of a collapsed purchase.
“A late stage collapse costs on average £5,439.80 in estate agent fees, valuations, surveys and legal costs.”