Funding for Lending Scheme - taking the heat out of the housing market?
29 NOVEMBER 2013
The removal of support for mortgages under the Funding for Lending Scheme announced yesterday by Mark Carney, the Governor of the Bank of England, is designed to take some of the heat out of the housing market rather than stall it. How this single move effects the cost of a mortgage for the man in the street remains to be seen but it is a significant move. Calling the effect of any such move on the property market is an art form and depends on where you sit. For the millionaire property buyer, the news is another factor to consider when trying to find their dream home. For the first time buyer the news could mean more time in rented. For those in the middle it might be a good time to review their finances.
To a large extent though London and the South East property markets have been operating in a market of their own in recent years with the phenomenal increase in property values. Demand has in many cases outstripped supply and looking closely at the top end market this looks set to continue. Across the wider market, the housing recovery is still in its early stages but for it to be sustainable in the long term it needs to be built on a solid foundation. Ultimately the effect of this announcement will take some time to filter through but as Mr Carney has said it is intended to take the foot off the accelerator rather than to put the brakes on.