Rabbits without hats. Carrots to accompany the sticks. Sugar to coat the pill.
I get the impression that the new Prime Minister and his Chancellor, plus the entire HR cadre of HM Treasury and Number 10, will have spent quite a bit of time recently looking for examples of the above to make their intended economic statement. on November 17 a little nicer.
Judging by the ‘roll of the pitch’ that the government is currently carrying out, we can all brace ourselves for some incredibly severe tax and spending measures that, as some have already said, may sound like ‘Austerity 2.0’ ”.
Delivering the news of both tax rises and spending cuts is unlikely to make Jeremy Hunt flavor of the month, or indeed of the year, so it would be very surprising if there wasn’t there was some attempt at positivity maybe towards the end. of his statement as he tries to end with “good news”.
So what can this mean? And will these “gifts” be focused on the housing market, particularly for a demographic that has been front and center for governments of many persuasions in recent times: the first-time buyer?
Politically, of course, offering more support to first-time buyers seems like a win-win situation. Especially given that Help to Buy has now effectively ended and the government’s mortgage guarantee scheme is due later this year.
The increases in the stamp duty threshold are virtually the only measure left from Kwasi Kwarteng’s ill-fated “mini budget”, and only because they were introduced immediately. Given how important the housing market is to the UK’s overall economy, Hunt may feel he has little to lose by looking at support for the former, and perhaps a little more help to boost the ‘offer and ensure that the number of purchase transactions does not fall further.
So what might this mean in practice? Many have suggested suspending the implementation of Help to Buy.
After all, it’s only for first-time buyers and has been a much more focused scheme, with regional price caps, in recent years. However, the end of Help to Buy has been much heralded.
As mentioned, it’s effectively closed now anyway because registrations for new homes were due by the last day of October.
To me, it is a non-starter to bring this scheme back, and there are other programs, perhaps most prominently, Deposit Unlock, which are already in place, without the need for taxpayers’ money, and are in a strong position to do exactly that same work
The best the government (and UK finance) could do here would be to give their verbal support to Deposit Unlock and other smaller schemes, and ‘encourage’ all those lenders who were part of Help to Buy to switch no problems there.
However, Hunt may think that an extension of the Mortgage Guarantee Scheme is not beyond the realm of possibility, and is unlikely to cost the Exchequer much anyway.
Again, I would prefer to see this scheme come to its natural end, especially as we have seen an improvement in recent weeks as markets calmed down and lenders could see a much clearer future for them to offer great value mortgages ( LTV).
If this can continue, Hunt may believe that there is no need to spend more taxpayers’ money on this scheme, because there are private mortgage alternatives available from people like us that are more flexible and competitive.
Although I completely understand why lenders like the convenience of having the Mortgage Guarantee Plan, even if the vast majority don’t use it.
To that end, we may not see any extensions to these schemes, so what could happen?
Well, a relatively inexpensive way to show some level of support for first-time buyers is to be more generous with savings incentives. With the Help to Buy ISA also closed, Hunt may feel able to increase the government bonus for those who save in a lifetime ISA, which is likely to be a relatively modest government gift.
In this way, the government could say that they are increasing their support for first-time buyers. And if it’s accompanied by a much bigger push to build more affordable housing, then he might think his job is done.
Whatever happens, it’s unlikely to be groundbreaking in terms of its impact on the first-time buyer. We could say that at least something is better than nothing on November 17th, but I suspect the headlines are already being written and they won’t be pretty.
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