Mortgage deal costs affected by UK borrowing rates

“Just a 1 per cent rise in our market interest rates would add £10bn to mortgage bills every year” claims Chancellor George Osborne in his Autumn Statement, he added that a “1 per cent rise would mean the average family with a mortgage would have to pay £1,000 more.”

He also said that “Last April, the absence of a credible deficit plan meant our country’s credit rating was on negative outlook and our market interest rates were higher than Italy’s. Eighteen months later and we are the only major western country which has had its credit rating improve.”

Italian market interest rates increased by almost 3 per cent this year, the Chancellor he said that he does not want to take the same risk with the British economy. The cost of slowing down Britain’s debt-cutting plan could push up the rates British borrowers will have to pay.

It was also announced that the temporary first-time buyers stamp duty concession will end on 24 March 2012. Many mortgage lenders see this move as disappointing as it was a significant help to home owners entering the housing market, it is also counter to the new housing strategy.

Wendy Evans-Scott, president of the National Association of Estate Agents, said “We were disappointed to see that the first-time buyer holiday for Stamp Duty Land Tax is not being extended beyond March 2012”.

The Autumn Statement has failed to provide any comfort for the property market. Estate agents and lenders would like to see the Government doing a lot more to help the first-time buyer market. Ending the stamp duty holiday is seen as yet another barrier for first-time buyers trying to get onto the property ladder.

Peter Rollings, chief executive of estate agent Marsh & Parsons has said "Osborne gives with one hand, and takes away with the other. The failure to extend the holiday for first-time buyers will undermine the government's own attempts to kickstart the first-time buyer market across the country. While the new mortgage indemnity scheme may improve the accessibility of mortgage finance to many credit-worthy borrowers, first-time buyers will need to save for longer to pay the stamp duty bill as they move."