Chancellor Launches Hefty Package To Help UK Out Of Current Crisis

The Chancellor of the Exchequer, has just set out a £1.8bn bundle of measures to aid the property sector in his pre-budget report. The bundle of measures includes extra money for social housing and increased help for Property Owners unable to meet the repayments of their mortgages.

However, will it be adequate to tempt back the Home Buyers and give everyday Property Owners the confidence they need to begin to Buy Homes again? 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 find somebody ready willing and able to Buy my House for a reasonable price.

Responding to the latest news that Property repossessions were at a nine year high, the Chancellor set out a series of measures to ensure help for Property owners in financial difficulty, with the aim of making sure that repossession is always a last choice.

The government are also expanding their mortgage rescue scheme under which Property owners will be able to sell their Property to a housing association and then rent it back for an affordable rent. Alternatively, they could just sell a share of their property. There’s also an expansion of the system to aid Home Owners at risk of losing their Houses because of arrears with second mortgages.

There will be also a greatly improved bundle of measures to help Property Owners who are struggling to manage their mortgage repayments. At present, no benefits are paid to cover mortgage interest costs until thirty nine weeks after the salary earner loses his or her job. This is now cut back to only 13 weeks. At the same time the maximum mortgage covered by the scheme will increase to £200,000.

An additional £775million will also be spent this year and next on new and modernised social Houses, and whilst this is a very reasonable & compassionate action to take, it must be understood that it may well cut the number of Property purchasers in the market, and this can only have a negative effect on Property values.

However many experts said too little had been done to revitalise the Property Sales UK market itself. They say the package doesn’t do enough for would be 1st time purchasers who have to find much larger deposits than in the past. They also warn that Property Sales UK are in danger of being sucked into a serious downward spiral, because lack of mortgage funds is causing sales to disappear, and therefore cutting down Property prices. This will, they say, force more Property owners into negative equity, giving rise to more repossessions, and in turn a faster fall in Property prices. Of course, any such problem won’t be limited to the Property sales UK market. The pain will cascade into supplier industries and through them into the rest of the economy.

The most pessimistic forecasts forecast a total standstill or even a net negative figure for Mortgage Lending during 2009, with only a very slight 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 Property sales UK market, and to put their funds into Houses. They’re doing this even though they know that home prices are still plummeting, 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 provide one of the very few positive patches in the current Credit Crunch.