- 10 March 2021
- Posted by: mikey0809
- Category: Mortgage
The organisation believe that extending the furlough scheme until the autumn, therefore reducing unemployment was the biggest action to prevent a fall in house prices in the short term.
Evidence given to the Treasury Select Committee of MPs, Professor Sir Charlie Bean member of OBR budget responsibility council said there was more underlying strength to the market now.
He said; “The big picture now is that house prices are pretty stable through 2022-23. That partly mirrors the fact that relatively strong growth in prices recently has raised them relative to earnings and household incomes and is starting to stretch affordability,”
“You need a period of somewhat low house price growth given our household income profile to bring those two back into some sort of medium-term balance.”
Seeing the impacts of the chancellor’s 95% loan to value (LTV) mortgage guarantee scheme formally announced at the Budget he acknowledged this would encourage lenders.
“But the market has started to loosen up somewhat there,” he continued.
“We would not expect this to have a large effect on the market and our judgement of previous interventions like this is that the effects are generally quite modest.”
Fellow budget responsibility council member Andy King agreed, adding: “We would expect high LTV mortgages to come back and the mortgage guarantee scheme will clearly bring them back more forcefully and more quickly.”
He noted the effects of the previous incarnation of the guarantee were difficult to unpick because it was launched at the same time as the much larger equity loan.
“But it did have a clear impact on the volume of high LTV mortgages that were available and we would expect at a minimum to help first-time buyers,” he added.