Hung Parliament- Is this good news for homeowners?

As expected The Bank of England have today decided to hold the base rate at 0.5%

This is despite increased uncertainty surrounding the property market as a result of a Hung Parliament, with a number of property experts expressing their fears about the UK housing sector during the remainder of 2010.

Although the general trend in the UK property market has been positive over the last 12 months it has been very volatile and very difficult to forecast. The fragile nature of the recovery will not be helped by the uncertainty surrounding the next government with many political experts predicting another election within 12 months.

There is concern that the hung parliament will increase the cost of borrowing in the UK which would reduce liquidity in the mortgage market and increase the cost of mortgages for UK consumers.

However on a positive note, a reduction in demand for houses would obviously have a negative impact on property prices which could prompt a new wave of first time buyers.

In this marketplace expert views are wide and varied. Nigel Lewis, property analyst at FindaProperty.com said – “Property markets tend to pick up after elections whatever the outcome as home buyers and sellers pick up the reins again and get moving after the hiatus around the final weeks of the campaign – and with the exception of the Tories and their desire to scrap HIPs, none of the parties have major changes to the market on their agenda so a hung parliament won’t change much.”

If the Tories reach an agreement with the Liberal Democrats and form a government you can expect them to…

1. Maintain the £250,000 Stamp Duty threshold for first-time buyers indefinitely.

2. Bring in a new 5% rate of Stamp Duty to be introduced on properties worth £1m+ in April 2011.

3. Scrap Home Information Packs (HIPS).

4. Scrap big regional building plans and replace them with local initiatives.

Taj Kang, Associate Director at Contractor Mortgages Made Easy commented “Despite the potential increase in the cost of borrowing, the forecast fall in house prices could lead to more first time buyers making a move into the market. As always, we would advise any contractor seeking a mortgage to utilise the services of a Contractor Mortgage Specialist”

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