The current £125,000 threshold will be raised as part of a package of measures aimed at boosting the housing market.

Someone buying a home for £175,000 will save £1,750 under the scheme, which is likely to cost the Treasury £600m.

The government estimates half of all property transactions will now be exempt from stamp duty - up from one third when the threshold was £125,000.

Prime Minister Gordon Brown said the package of measures - including help for first-time buyers and families facing repossession - showed the government was taking action to help people through difficult times.

“Home owners need to know that we will do everything we can to keep the housing market moving,” he stated.

But the Conservatives - who say they would scrap stamp duty for first-time buyers on properties worth £250,000 or less - said the measures were a short-term survival plan to help keep Mr Brown in a job.

The government has not said how it will pay for the £600m estimated cost of the stamp duty move.

Chancellor Alistair Darling said he would reveal more details in his Autumn Pre-Budget Report.

He said the government was also considering ways of increasing the availability of mortgage finance.

But - in an echo of his weekend interview with The Guardian in which he said the economic downturn could be worse than previously thought - he said other factors would be crucial to the housing market’s recovery.

“We face a unique set of circumstances that we have not seen in generations, where you have a credit crunch and where you have high oil and food prices.

“But I remain optimistic, as I have said on many occasions before, that we can get through it.

“We will get through it and today’s measures, helping the housing market, are one example of how the government will help people.”

Other housing moves announced by the government include:

“Free” five year loans of up to 30% of a property’s value for first time buyers of new homes in England
Extension of powers for councils and housing associations to be able to pay off debt for homeowners who can no longer afford mortgage payments and then charge rent.
Shortening from 39 weeks to 13 weeks the period before Income Support for Mortgage Interest is paid
Bringing forward spending from future years to encourage more social housing to be built
The funding for these measures, which unlike the stamp duty move will only apply in England, has been previously allocated and brought forward, the Treasury said.

Under the new loans system, called HomeBuy Direct, households in England earning less than £60,000 will be offered loans free of charge for five years on new properties, co-funded by the state and developers. 

Once the five-year “free” period is up, homebuyers will be asked to pay a fee, the Department for Communities and Local Government said - although no more detail of this was provided.

In a statement, the DCLG said: “Not only will this [HomeBuy Direct] help first-time buyers… it will help the housebuilding industry weather difficult conditions.”

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The Council of Mortgage Lenders (CML) have put forward a plan to free up UK banks and building societies to offer new home loans.

It wants the Bank of England to guarantee a market in mortgage-backed securities and covered bonds.

It hoped This would encourage investment in the market for these products, pushing funds back into mortgage lending.

Lack of Confidence

The CML said that the biggest issue in the mortgage market was the lack of available funding to support new mortgage lending.

This has led to a squeeze in number of mortgage deals on the market and the cost of these loans rising.

The lenders’ body wants the Bank to essentially offer a form of secured lending. Which is hoped would help persuade investors to buy mortgage-backed securities - something that has dried up during the credit crunch.

The scheme could be set up rapidly and would act as a catalyst to restore market confidence, the CML said.

Unlike the Bank of England’s Special Liquidity Scheme - which allowed banks to swap £50bn of mortgages for government bonds - it would cover new mortgages and investors would still take the credit risk.

“A year into the credit crunch, there is no merit at all in waiting until the autumn before taking steps that will help the housing market to remain more resilient,” said CML director general Michael Coogan.

The plan would probably receive a cool welcome from those who believe it would involve the state having to underwrite the housing market.

Others might suggest that the drought in mortgage finance would continue without any action.

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Bradford & Bingley has increased the cost of its fixed rate residential loans of between 0.5% and 0.7%.

First Direct increased its two-year fixed deal by 0.16% to 6.15%. The Co-op upped its three-year fixed rate of 0.7% and its five-year period the rate of 0.9%.

The move comes as banks find it harder and more expensive to finance loans.

They have been caught in a credit crunch, has brought an end to a decade of borrowing cheap and easy loan.

Given the slow global economic growth, accelerating inflation and the weakening of the real estate markets, banks are tightening lending requirements and raising rates to those offered mortgages.

Bradford & Bingley also raised their mortgage rates variable annuity rate of 0.1% and put the cost of  buy to let deals by 0.3%

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The figures are in line with the latest survey from the Royal Institution of Chartered Surveyors, which said that falls in house prices were now more widespread than at any time since 1978.

In an attempt to overcome the effects of the credit crunch, the Bank of England recently made extra funds available to UK banks to encourage them to start lending to each other again but so far this is having little affect and Libor still remains high relative to the Bank rate and any improvement in credit market conditions will take time to feed through into the mortgage market

However, one of the biggest mortgage lenders, the Nationwide building society, cut some of its fixed rate loans for new borrowers by up to 0.3%.

The society said it was responding to the Bank of England’s move to restore lending between banks.

Last week though, the Building Societies Association warned that the current blockage in the mortgage market might last for another two years.

First-time buyers

The number of mortgages for house purchase has now fallen by 40% over the past year And first-time buyers are continuing to be squeezed out even more than before.
There were 17,800 first-time buyer loans in March, the lowest monthly level on record since monthly figures were first compiled in 2002.
This took the number of first-time buyer mortgages in the first quarter of 2008 to 53,700, which was the lowest quarterly figure since the start of 1975.

If your thinking of applying for a mortgage or loan in the near future its more important than ever to make sure the information held on your credit file is accurate and up to date as the smallest error could lead to you being refused credit or charged a higher interest rate costing you thousands even tens of thousands over a mortgage term whilst the banks are tightening there belts.

See your credit report online today with a 30 Day Free Trial of Credit Expert

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To obtain a copy of your credit report online you will need a valid credit or debit card this is to verify your identity only your card WILL NOT be charged unless you chose to order an optional credit score or wish to continue online access after the 30 day trial is up.

The Credit Expert service is provided by Experian the UK largest and number one credit reference agency used by all the major banks and financial institutions so you can be sure the information provided will be transmitted and treated with the highest security.

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Quote From Experian

It is our priority to make sure information is kept secure. All the information we hold is processed in accordance with the Data Protection Act 1998. We screen our employees carefully and our premises are very secure. We constantly review how we can protect our information databases, and our reputation for maintaining privacy.

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• Your payment history – usually shows credit card and store card accounts, loans, mobile phone accounts and some bank accounts which are reported about you every month to the credit reference agency – in some detail including lender names, how you have kept payments up over the last 4 years on each account, credit limits, balances, account start dates and much more
• Court actions (judgments and decrees) recorded against you over the last 6 years
  Insolvencies (bankruptcies, sequestrations, trust deeds, individual voluntary arrangements and more) recorded against you over the last 6 years
• Searches – lists those organisations that have looked at your credit report over the past 2 years
• Your Electoral Roll Information
• Financial Associations – displays third parties who you are known to be financially linked to you
• Fraud Warnings – identifies if any fraudulent attempts have been made to apply for credit from your address.
• Notice of Correction/Dispute – any recorded issues still showing on your credit report.
• Details of any addresses that are known to be linked to you

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If you are declined frequently, your credit report will have tell-tale searches recorded, and no account information – lenders will assume that you have had trouble getting credit.

When you move house, contact your local Electoral Registration Officer to arrange to be put on the electoral roll right away.

Check your credit report for errors – regularly.

Remove anyone on your credit report who is not financially connected to you parents siblings or ex partners can sometimes be incorrectly linked to you and this can have a negative effect on you credit report if they have a poor financial history. Its your right to have anyone e.g. wife or current partner not financially linked to you removed from your file.

Don’t pay anyone who claims they can ‘repair’ your credit report, credit rating or claim to hide judgements. Most of the methods they use are unlawful, and can easily end up with a fraud warning on your credit report that you won’t be able to remove for a very long time.

Make sure your credit report is accurate with a 30 Day Free Trial of Credit Expert

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Applications for credit will be noted as a credit search footprint, other viewings of your credit report, such as when you apply for a job or a flat, noted as an enquiry footprint.

No one can view your credit file without your permission except the taxman, the DSS, the police or others with court approval.

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