Stamp duty freeze - will it help the adverse credit market?

• How can we help
• Adverse Credit Mortgage
• Mortgage with Poor Credit
• Get a mortgage with no broker fee
• Buy to Let
• Commercial Mortgages
• Credit Repair
• Debt Consolidation
• Get Your Credit Report
• Insurance
• IVA
• Repossession
• Self Cert Mortgage

• Resource Guides
• 10 key questions answered - adverse credit mortgages
• Adverse Credit Explained
• Adverse Mortgage Facts
• Credit Reference Agencies
• Income and Affordability
• Loan to Value - What is it
• Mortgage Jargon Buster
• Mortgage repayment guide £160,000 to £200,000
• Mortgage repayment guide £210,000 to £250,000
• Mortgage repayment guide £260,000 to £300,000
• Top 10 guide to getting a bad credit mortgage

• Credit Crunch
• What are credit crunch mortgages?
• 55% or lower LTV mortgages
• 60% Mortgage
• 70% Mortgage

Stamp Duty Freeze
will it help the adverse mortgage market?

The freeze on stamp duty proposed by Gordon Brown which will be announced in September 2008 is an attempt to both improve public perception of the Labour party and to try and bolster the mortgage market.

Will freezing or deferring stamp duty really help?

I would think it unlikely it will help people obtain mortgages from the lender. It may make properties more affordable to the potential borrower in lump sum terms but in my opinion that's not what's causing the slump in the housing market at the moment. What I mean by that is the main reason mortgage approvals are down is the lending criteria is tighter than ever and getting a mortgage approved, especially in the adverse credit market requires a number of hoops to be jumped through by the borrower.

Lending criteria and interest rates being high are pushing people outside the lenders underwriting criteria - with that in mind what difference would it make if the stamp duty is differed if the potential borrower can not get a mortgage approved in the first place. If stamp duty is frozen it is sure to help some but it is unlikely to help potential borrowers who can not get approved for a mortgage.

I still think any help within the mortgage market is a good thing and will not complain if they do in fact freeze or defer stamp duty, any help no matter how little to the industry at the moment can only be a good thing. However stating they may be freezing stamp duty at the beginning of August (not to be confirmed until September) will no doubt mean August 08 will be a dire time for the mortgage market as people hold off in the hope that the government does in fact freeze or defer stamp duty - although bearing in mind the notes above I wouldn't put too much hope in this actually helping the market too much. Especially when the government receives approx £6.5 bn from stamp duty each year.

Its unlikely they will freeze or defer all stamp duty - I would think it is much more likely they will freeze only the lower end of the market (the 1% stamp duty) which will effect house purchases costing between £125,000 and £250,000.

We will have to wait and see if they do freeze stamp duty, as mentioned before any help, no matter how small can only be a good thing but I would question the actual impact it will have on mortgage approvals - that's down to the lenders underwriting criteria which are dictated by various market conditions and interest rates such as the Bank of England Base Rate, inflation and LIBOR to name a few.