By Samuel Indyk
Investing.com – UK homebuilders surged to the top of the FTSE 100 on Monday after reports that the UK Chancellor Rishi Sunak will announce further measures to support the housing market in Wednesday’s budget.
It had already been leaked that Sunak would likely extend the stamp duty holiday until the middle of the year ahead of its scheduled expiry at the end of this month.
And now reports from over the weekend have suggested that the Chancellor will announce a mortgage guarantee scheme to help people with small deposits get on the property ladder. The government is expected to offer incentives to lenders which to bring back 95% mortgages which have “virtually disappeared” during the Covid pandemic.
Homebuilders
Unsurprisingly, homebuilders like these reports. Persimmon (LON:PSN), Taylor Wimpey (LON:TW) and Barratt Developments (LON:BDEV) are all surging as measures to keep the housing market buoyant should continue to drive profits.
Similarly, the UK house search website Rightmove PLC (LON:RMV) has also benefitted with shares up just shy of 4%.
Scheme details
The new mortgage scheme will not be restricted to first time buyers or new build homes, however, there will be a £600,000 limit according to the BBC. The government is expected to take on some of the risk of these low-deposit mortgages.
Regarding the stamp duty holiday, currently homebuyers do not have to pay stamp duty on any property up to £500,000 until the end of the month. The Chancellor is expected to announce a three-month extension to this plan to avoid a cliff edge as buyers cannot complete in time for the March deadline.
Rightmove has estimated that if there is an extension, an additional 300,000 sales could benefit from paying no stamp duty on their home purchase.