Long-term mortgages: Darling plans under scrutiny
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Budget long-term mortgage plans "smoke and mirrors"
Friday, 14 Mar 2008 11:55
Alistair Darling failed to deliver anything of note in the Budget for the property market, according to industry experts.
Plans to promote long-term mortgage lasting over 20 years were also criticised for being ineffective.
Ross Bowen, from the Connells estate agency group, said: "This budget is all smoke and mirrors.
"Darling has failed to deliver anything which will have a noticeable impact on our severely weakened housing market - borrowers looking to buy now aren't going to benefit at all."
With the chancellor announcing a review of long-term mortgages, Mr Bowen said he was avoiding the real issues behind the woes of the property market.
"Long-term fixed rates are already available to borrowers but they choose not to take them. Increasing the choice of long-term fixed-rate mortgage products won't encourage borrowers to fix for two decades.
"Darling's focus on this dodges the real problems in the mortgage market - rates are too high for borrowers to afford and tightened criteria means limited access to funds for those with poor credit histories."
However, Steve Cox, operations director of Spicerhaart Financial Services, said long-term mortgage would help buyers and insulate them from future interest rate swings.
"We welcome any move allowing borrowers to budget with affordable and suitable products and the government's proposal to encourage longer term fixed-rate mortgages could help to fulfil this ideal, enabling people to budget their finances over the longer term and making them less likely to default.
"Flexible long-term fixed-rate products would make buyers less exposed to interest rate rises, and reduce the risks for borrowers such as first-time buyers."
But he added more action was need to support the property market.
"The stability of the housing market will not be guaranteed by this proposal alone, however, as a range of other factors also shape market conditions and consumer choices," Mr Cox said.
"At this stage it will be difficult to judge the potential uptake [of long-term mortgages] and effects on the market."