Many remain unconvinced by the Chancellor’s portrayal of long-term fixed rate mortgage deals and gold standard mortgages as practical solutions for potential home buyers.

Director of the Association of Mortgage Intermediaries (AMI), Richard Farr, describes the budget as “a lost opportunity for home owners, and those aspiring to property ownership”.

Mr Farr acknowledges the Government’s decision to eradicate stamp duty for first-time buyers who own less than 80 per cent of their shared ownership home, and its new shared equity scheme for key workers who can only afford 50 per cent of their home as “a positive first step”.

“However, neither of these schemes will help the substantial number of ineligible applicants who are also struggling to purchase their first home,” he points out.

Mr Farr says that the Government has ignored the fact that there has been an 83 per cent rise in the cost of stamp duty for first-time buyers (according to a recent Halifax report). He says: “The Government hasn’t increased stamp duty thresholds in line with property prices, and the duty is increasingly becoming a stealth tax.”

The AMI also has reservations about the Government’s desire to increase the number of 25-year fixed-rate mortgages. The Chancellor said he envisages “more flexible and affordable long-term fixed-rate mortgages for 10, 20 or even 25 years.”

But Mr Farr believes this is not the answer. He says: “One of the unique advantages of the UK economy is that it has a flexible, mobile workforce, supported by an innovative and dynamic mortgage market which already includes a range of longer-term fixed rates.

“Our research has left us in no doubt that borrowers are yet to be convinced that long-term fixed-rates are a good deal for them. The Treasury should promote the competitive, diverse and flexible mortgage market, which already exists in the UK, instead of exclusively focusing on 10, 20 or even 25 year fixed-rate mortgages.”

The AMI is also hesitant about proposals for reclassification of mortgages, whereby the most secure, “gold standard” mortgages will be separated from the less secure options.

“AMI sees this as one option to stimulate trading in the mortgage-backed security market, allowing a wider range of complementary funding for lenders which should facilitate enhanced competition and wider choice for borrowers,” says Mr Farr.

“However, we are concerned that the kitemark is not restricted to just prime mortgages and should include all types of asset that have a better than average performance, such as buy-to-let lending.”

© Fair Investment Company Ltd