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Mortgage lending should improve thanks to a £50 billion mortgage guarantee scheme announced in the budget today.  At the same time, another £500 could help the construction sector to survive the downturn.  And most Scots will continue to avoid Stamp Duty for the rest of this year as the suspension of the tax for properties up to £175,000 was extended until the end of 2009.

More mortgage lending
Chancellor, Alistair Darling, told the Commons that the government would provide guarantees for up to £50 billion worth of mortgage securities.  The move should make it easier for lenders to raise new money in the financial markets by guaranteeing that parcels of mortgages sold to investors are protected from severe losses.  The guarantees will only be available for new lending and the fact that the securities are guaranteed by the government could also help lenders to offer mortgages with higher loan to value ratios.  

Council of Mortgage Lenders director general, Michael Coogan, said that the scheme was: "The most important element of this Budget.......This potentially offers an opportunity to restart the capital market funding for mortgages that will be a crucial factor in delivering an adequate supply of mortgage credit".

His views were echoed by Gillian Charlesworth, RICS Director of External Affairs who commented that: "A Government backed guarantee mechanism is a welcome, although long overdue, intervention to help address this [limited mortgage lending] problem. This should allow the recent increase in buyer inquiries to translate into an increase in sales". 

More house building
The Chancellor also pledged £500m extra for the house building sector, which he says will help the development of thousands of new homes.  The money is designed to kickstart new housing projects that have stalled because of the recession. 

The money will be spent in England & Wales, but should help to support developers who operate across the UK.  Nevertheless, Homes for Scotland, the body that represents the house building industry in Scotland called on the Scottish Government to do the same. 

Stamp Duty freeze
Many Scots will continue to avoid paying Stamp Duty this year.  The decision to raise the ceiling at which the tax is payable to £175,000 (from £125,000) has been extended to the end of this year.  Since the average price of a home in Scotland is now around £135,000 (HBOS) and the average price in Glasgow around £142,000 (GSPC), many buyers will find that they do not have to pay Stamp Duty at all.