Alistair Darling used the pre-Budget report to announce the launch of a new lending panel that he says will improve problems in the mortgage and housing markets.
The remit of the new committee - which will be made up of lenders, trade bodies and consumer groups - will be to monitor levels of lending both to individuals and businesses and drive ‘best practice’ across the industry and raise awareness of initiatives designed to help struggling homeowners.
Following discussions with major lenders, Darling confirmed that he had a commitment from the UK’s major lenders not to initiate repossession proceedings until borrowers were three months in arrears. Repossession will be viewed as a last resort and lenders are expected to treat borrowers fairly and consider options such as restructuring payments and payment holidays.
As job losses continue to increase he also announced that he’d help those who are out of work by extending the Support for Mortgage Interest Scheme by raising its capital limit from £175,000 to £200,000. This was also backed with a pledge to drop the interest rate on which benefits are calculated following recent reductions. This followed a reduction in the waiting period for this benefit from 39 weeks to 13 weeks in September.
And for any borrower struggling with repayments, Darling announced that he would be spending £15 million on improving the provision free debt advice.
Finally, in order to demonstrate the government’s commitment to increasing the supply of affordable and social housing, Darling confirmed that he would accelerate the payment of £775 million to be spent on housing and regeneration.
Jonathan Turpin, chief executive of Moveme.com, was not impressed by the measures.
“Bringing forward funding for social housing is a welcome move that that will not only ensure the provision of jobs within the industry but also housing for the most vulnerable," he says. "However it offers little in the way of assistance for the large proportion of first-time buyers who want to purchase their own home but are being restricted by high deposit requirements and high moving costs.”
David Bexon, managing director of SmartNewHomes.com, was equally downbeat: “As anticipated, the chancellor has offered little to stimulate the housing market in the short-term. While I welcome his measures to protect homeowners against repossession, there were no proposals geared towards encouraging buying activity now, aid first-time buyers or to increase mortgage supply, for which we will have to wait until the spring budget to hear their detailed scheme.
In order to truly stimulate the economy, Ross Bowen, managing director of Connells Survey and Valuation, says further interest rate cuts and a full stamp duty holiday would be required.