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CML response to Budget

22 Apr 09

CML response to Budget

The Council of Mortgage Lenders responded to the modest measures announced by the Chancellor in today's Budget as helpful, but unlikely to make much of an impact overall on the housing market.

The relevant measures include -

  • The introduction of a scheme to guarantee mortgage-backed securities, which the CML has been recommending for some time 
  • Maintaining the standard rate of 6.08% at which income support for mortgage interest (ISMI) is being paid for a further six months (to December 2009)
  • Extending the criteria for mortgage rescue (the scheme being delivered via local authorities) so that negative equity cases are not automatically precluded
  • A new £20 million scheme for local authorities to provide loans to families at risk of homelessness
  • An extension to the end of the year of the £175,000 starting threshold for stamp duty
  • An £80 million extension to the Homebuy Direct scheme
  • Extension of ISA allowance from £7,200 to £10,200, providing a modest boost for the outlook for retail savings, and hence funding.

Commenting on the measures, CML director general Michael Coogan said:

"The most important element of this Budget for the mortgage market over the long term may prove to be the new asset backed securities guarantee scheme. This potentially offers an opportunity to restart the capital market funding for mortgages that will be a crucial factor in delivering an adequate supply of mortgage credit.

"Although today's Budget measures will have little short-term impact on the housing and mortgage markets, they do at least remove some of the uncertainties associated with the potential impact of withdrawing stamp duty and ISMI concessions too early, and provide some relief to support the new-build housing market.

"The Chancellor had little room to make substantive interventions, so there are no real surprises in this list. The measures overall are unlikely to significantly improve prospects for higher market activity in the coming months."

Notes to editors

1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 98% of all residential mortgage lending in the UK. There are 11.7 million mortgages in the UK, with loans worth over £1.2 trillion.

Contact details
Name: Sue Anderson
Tel: 020 7438 8924
Name: Bernard Clarke
Tel: 020 7438 8923
Name: Jayne Chichester
Tel: 0207438 8922