I still can’t get my head around the maths of the £615m which the government has promised to spend on its stamp duty holiday for those buying a home worth between £125,000 and £175,000.
The figure suggests that – at about £1,500 per home-buyer – about 30,000 people will be helped every month.
Due to a presentational balls-up, one housing policy – arguably the most substantial of today’s package - has been widely overlooked.
This is the strengthening of support for people who lose their jobs to keep paying their mortgages: Income Support for Mortgage Interest (ISMI).
There has been a mixed reaction to the first part of the recovery plan. But, at least in the equity market, the response has been relatively positive. Shares of struggling housebuilders are rebounding, with Taylor Wimpey up more than 8 per cent and Barratt Developments up more than 5 per cent.
But this may have little to do with stamp duty. A close look at some of the share price movements today suggests they moved up before the stamp duty holiday was announced by press release at 9am. Most housebuilders have been relatively steady since then.
Gordon Brown: “I am allowing you to fulfil the dream of home ownership. You are very fortunate.”
Member of the public: “Thank you prime minister. But will this stamp duty holiday make much difference? Me and the wife earn £40,000 a year between us. We’ve saved up a deposit of £15,000. Last year the banks would lend us £160,000 but now – for some weird reason – it’s only £120,000. So we’re 40 grand short from buying our £175,000 dream home.”
More from the interview that keeps on giving. Alistair Darling told the Guardian that he first heard the credit crunch alarm bells while on holiday with his family. Here is the quote in full:
“I remember I picked up the FT in the supermarket, as you do, and it had the European Central Bank starting to put money into the economy. I phoned the office to ask why they were doing quite so much. It didn’t surprise me that money was going in – there was concern going around – but it was the sheer scale of it…..No one knew how serious it was yet.”
So, the stamp duty holiday for first-time buyers will happen. On homes up to £175,000. And for one year only.
The figure of £615m sounds reasonably generous…until you consider that the housing market is worth over £5 trillion.
Everyone knows that 125 per cent mortgages (Northern Rock et al) were a dreadful, top of the market idea. Most realise that 100 per cent mortgages are also a bad idea. Because a home-owner has no equity in his house, any fall in prices leaves him – immediately – in negative equity.
So what on earth is the new “HomeBuy Direct” scheme which will form part of today’s package of measures to help the housing market? Under the programme, first-time buyers can borrow up to 30 per cent of the value of a new-build home – interest-free for five years – co-funded by both the government and housebuilders.