Disliked13:06 02Sep08 IDEA-ANALYSIS: (GBP) UK: Housing Market Rescue Package Due Today?
(GBP) So, PM Brown as part of his political fight back, is reportedly set to
announce a GBP multi-million UK housing market rescue package tomorrow, withadditional measures set to be announced later this week or early next, and moreinitiatives to be tabled at the time of the autumn pre-budget report (PBR). Theinitial impact on GBP should be +ve, albeit temporary, (depending on the sizeof the package), as a govt spending boost should be supportive for the economy,and the possible consequential delay in BoE monetary policy easing should keepUK interest rate differentials favourable.
The measures are said to likely include making more funds available to local
authorities to help first time buyers (FTBs) on to the first rung of the property ladder, with councils able to buy up repossessed homes and unsold
properties from which they can provide social housing. They will also be able
to offer struggling borrowers financial assistance in return for part ownership
in their homes or outright ownership if necessary. It is unclear whether or not
a stamp duty suspension/holiday will be announced, although it is being considered. Other measures that are thought to be under consideration includedoubling the allowance for cash ISAs to GBP7200 for those saving up for a home,as well as the possible creation of a new regular tax efficient savings scheme for FTBs. Following on from today's likely announcement, another package is expected to be announced either later this week or early next week, with initiatives aimed at assisting low income households facing increased hardship as a result of higher domestic fuel bills. The aim is to assist those households in particular that spend above 10% of their disposable income on energy bills.
In terms of the wholesale mortgage market, further measures to reignite
activity there will probably be deferred to the time of the Pre-Budget Report
(PBR) in the autumn, after agreement between the BoE and the govt. Indeed the Sunday Times already indicates that the BoE is preparing to extend its SLS specifically for building societies that are currently setting up covered bond vehicles. However HMT is said to be averse to direct govt intervention into the mortgage market and the BoE has made it clear it is not keen on extending the SLS to take in new mortgage backed securities issued after 2007.
It is any one's guess how much the initial proposals are to cost the tax payer, (in top of the GBP2.7bn of tax cuts that the govt will already spend subbing those households that have been hard done by by the removal of the 10p tax band). But there is talk that a windfall tax on the super normal profits of energy companies (favoured by Labour MPs) could be announced to help finance some of the potential increased spending that would come about as a result of the economic rescue package. For a fiscal package to have a significant impact, and perhaps help arrest the slide in the govt's public opinion ratings, the size should probably be no less than 1%-1.5% of GDP. The govt can't really afford this without further undermining its own ability to meet its self-imposed fiscal rules. The BoE for its part will want to see how much any fiscal package adds to GDP growth, as the size of the impending measures could have a bearing on the timing of the resumption of the BoE's monetary policy easing cycle. The PSNB budget deficits for FY2008/2009 and FY2009/2010 are set to turn out perceptibly higher than the respective 2.9% and 2.5% of GDP ratios than the govt currently projects.Ignored
- Post #109,681
- Quote
- Sep 2, 2008 12:19am Sep 2, 2008 12:19am
- | Joined Apr 2008 | Status: Member | 7,674 Posts
- Post #109,682
- Quote
- Sep 2, 2008 12:25am Sep 2, 2008 12:25am
- | Joined Apr 2008 | Status: Member | 7,674 Posts
- Post #109,684
- Quote
- Sep 2, 2008 12:37am Sep 2, 2008 12:37am
- | Joined Apr 2008 | Status: Member | 7,674 Posts
- Post #109,685
- Quote
- Sep 2, 2008 12:40am Sep 2, 2008 12:40am
- | Joined Apr 2008 | Status: Member | 7,674 Posts
- Post #109,686
- Quote
- Sep 2, 2008 12:41am Sep 2, 2008 12:41am
- Joined Apr 2007 | Status: HARD SHYT SCUBA TRADER | 20,883 Posts
Blogging daily now at www.volume.zone
- Post #109,687
- Quote
- Sep 2, 2008 12:44am Sep 2, 2008 12:44am
- | Joined Apr 2008 | Status: Member | 7,674 Posts
- Post #109,689
- Quote
- Sep 2, 2008 12:54am Sep 2, 2008 12:54am
- | Joined Feb 2008 | Status: Member | 796 Posts
- Post #109,691
- Quote
- Sep 2, 2008 1:21am Sep 2, 2008 1:21am
- Joined Jun 2008 | Status: Professional Frontrunning Troll | 2,312 Posts
- Post #109,692
- Quote
- Sep 2, 2008 1:23am Sep 2, 2008 1:23am
- Joined Apr 2007 | Status: HARD SHYT SCUBA TRADER | 20,883 Posts
Blogging daily now at www.volume.zone
- Post #109,694
- Quote
- Sep 2, 2008 3:02am Sep 2, 2008 3:02am
- Joined May 2008 | Status: has long shorts | 2,584 Posts
- Post #109,695
- Quote
- Sep 2, 2008 3:07am Sep 2, 2008 3:07am
- | Joined Apr 2008 | Status: Member | 7,674 Posts
- Post #109,696
- Quote
- Sep 2, 2008 3:12am Sep 2, 2008 3:12am
- | Joined Apr 2008 | Status: Member | 7,674 Posts
- Post #109,697
- Quote
- Edited 3:43am Sep 2, 2008 3:29am | Edited 3:43am
- Joined May 2008 | Status: has long shorts | 2,584 Posts
- Post #109,698
- Quote
- Sep 2, 2008 3:52am Sep 2, 2008 3:52am
- | Joined Apr 2008 | Status: Member | 7,674 Posts
- Post #109,700
- Quote
- Edited 4:18am Sep 2, 2008 4:15am | Edited 4:18am
- Joined May 2008 | Status: has long shorts | 2,584 Posts