Home buyers are desperately needed to return to the housing market for property values to rebound.  Without a rise in property values or at least a stall more and more homebuyers will be plunged into negative equity.  Negative equity occurs when the mortgage debt on a property is more than the value of the property.  Already many households in the U.K. are under water with properties that have lost value at rapid pace as house prices plunged after the credit crisis.  For those homeowners a remortgage is not possible nor is a move.  They are completely stuck until they can pay off debt to keep up with declining property values or a rebound in house prices and property values occur.

It had been hoped that the stamp duty holiday that was put into motion in March of 2010 would start a trend of first time buyers returning to the housing market.  However, it was estimated that once the stamp duty holiday ended last week on March 24 that there were only 180,000 first time buyers assisted into a new property.  The NewBuy scheme is now in place and it too has high hopes.  Building societies and government will assist first time buyers into new build homes with low deposit requirements between 5 to 10 per cent.  This of course only helps first time buyers get into new builds and not already established properties that are waiting to sell on the market.

The Building Societies Association (BSA) recently released a report that showed new mortgage approvals in February were up 31 per cent in February over last year and 29 per cent on the previous month.  There was a value of mortgage approvals for February of £2.2 billion.

Adrian Coles, director general of the BSA, remarked, “Gross lending and new mortgage approvals by mutuals continued to rise year on year in February, despite growth across the market as a whole remaining relatively flat.

“The strong financial results released by a number of mutual lenders in recent months show that the sector is well positioned to offer market leading products to its customers and are open for business.”

This increase may have been from homeowners that had their starter homes purchased from first time buyers taking advantage of the coming end of the stamp duty holiday.  Rather than staying put and remortgaging they sold their home and found it possible to purchase a new build.  How well the NewBuy scheme will help home buyers is unknown but the hope is high from all those that could benefit especially homeowners unable to remortgage due to negative equity.