Budget 2010: Mortgage experts welcome Stamp Duty boost but affordability concerns remain

The mortgage industry has broadly welcomed the decision by Chancellor Alistair Darling to increase the Stamp Duty threshold to £250,000 for first time buyers.

However, some industry experts warn funding concerns remain and mortgage availability is still a major issue.

Stewart Baseley, executive chairman of the House Building Federation, says: "The move will helped beleaguered first-time buyers struggling to save the large deposits currently being demanded by lenders.

"First-time buyers are vital to the housing market and the shortage of those able to get mortgages has reduced the industry's ability to build the new homes we know this country needs."

Alison Beech, business relationship director at Spicerhaart, described the increased threshold as fantastic news for those at the lower end of the market.

But she adds: "Mortgage availability for those without a sizeable deposit remains challenging. A significant and sustained recovery will only be realised when the market is able to be more competitive and to increase loan to values.

Others in the industry also felt the Budget proposals did not go far enough.

Alan Cleary, managing director of mortgage servicer Exact, says it would have been even better if the relief had not been restricted to first-time buyers.

Paul Hunt, managing director of technology provider Phoebus Software, adds the change was a double-edged sword.

Although he said first-time buyers will be more encouraged to climb onto the property ladder, he warned that at the top of the market, buyers will be trying to force prices below £1m to avoid the extra £10,000 on a £1m property.

"This could well lead to another stall in the recovery if buyers maintain downward pressure on prices."

Meanwhile, Mark Blackwell, managing director of technology firm xit2, says funding in the market was still the real issue.

He adds: "Scrapping Stamp Duty for first-time buyers on purchases up to £250,000 and a 5% rate on properties over £1m is great for grabbing headlines but it does not address the real problem - funding.

"Yes the move will encourage more buyers into the market, but at the moment there simply isn't the funding to address this demand. Recapitalisation is one answer to the funding problem."

Jonathan Moore, director of easyroommate.co.uk, agrees: "It does not address the real issue for first-time buyers. First-timers simply can't borrow enough cash to buy a home, and are having to save for up to five years longer.

"There are other options - options that would cost the Treasury less in lost revenue. For instance, if the state-backed banks were forced to provide products that take lodger income into account, the average first-time buyer could access an additional £11,000."