Budget 21: Fall in house prices looks increasingly unlikely

Budget 21: The extension of the stamp duty holiday, together with the mortgage guarantee scheme, means that a fall in house prices in 2021 is increasingly unlikely, according to specialist lender Vida. 


Anth Mooney, CEO of Vida, said: “The new mortgage guarantee scheme will help more buyers onto the housing ladder but will also add to the upward pressure on house prices.

“The end of the Chancellor’s furlough scheme was expected to cool the housing market, but an accelerated vaccination rollout and the easing of lockdown restrictions has added further resilience to the UK property market.

“The new mortgage guarantee scheme is fantastic news for those who have struggled to get a foot on the housing ladder, and with low interest rates and a desire for more space driving an increase in activity, the scheme likely serve to inoculate house prices against the big falls that some were predicting for 2021.

“This policy will create a feelgood factor as we emerge from the pandemic, providing an attractive stimulus for homebuyers as the stamp duty holiday tapers off. We also welcome the upcoming review of the lender stress test, as any reduction in the 3% stress rate could help even more buyers on to the housing ladder.

“The original Help to Buy Mortgage Guarantee scheme underpinned more than 100,000 transactions (with a total value of mortgages supported of £15.8bn) in the four years before it closed in June 2017 – over 80% of which were FTBs (83,569) and the vast majority of which lived outside of London.

“Of the transactions, over 70% (71,800) involved borrowers with a total household income of less than £50,000.

“Add the challenges that buyers currently have in terms of raising deposits/securing products at 95% and the change that the pandemic has wrought in terms of the end of the daily commute, demand could well be many times these levels. Many key workers in or near London/the SE cannot hope to raise 10-15% deposit levels and are therefore effectively locked out of the market – this scheme should change that and we expect take up to be strong.

“As ever, all borrowers should take professional mortgage advice from an independent intermediary to ensure they’re getting the right product.”

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