Budget 2009: A point-by-point guide

This afternoon, Chancellor Alistair Darling outlined his plans and expectations for the economy over the next 12 months. Here is a point-by-point guide of the relevant points.

* Stamp Duty ‘holiday' - with no Stamp Duty payable on transactions up to £175,000 - extended until the end of the year.



* Extension of the Support for Mortgage Interest scheme, which covers mortgage interest payments for those who have lost their jobs, for a further six months.



* The major UK banks will increase the availability of mortgages by around £20bn this year.



* Mortgage-backed securities guarantee scheme, based on the recommendations of Sir James Crosby, introduced from today following State Aid approval.



* Further £80bn of funding for HomeBuy Direct shared equity scheme.



* Restriction on pension tax relief for those with incomes in excess of £150,000, gradually tapered to the 20% rate.



* New income tax band of 50% for those earning in excess of £150,000 to come in from next April.



* £500m package to help housebuilders kickstart stalled housing projects.



* A report on the reform of regulation to be published by the Treasury shortly, to improve regulation of capital and liquidity so that banks do not overstretch themselves and strengthen regulators' powers.



* Increase in the ISA limit to £10,200, for the over 50s from this year, and for everyone else next year. Of the new limit, £5,100 can be saved in cash only.

Long-term fixed rates risky, stupid and dangerous.

Mr Darling, The Chancellor of the Exchequer, gave his first Budget yesterday. There was not a lot in it for home-owners in particular, with no reduction in Stamp Duty for first time buyers, or otherwise. However he did state that he would like mortgage lenders to offer Long-term fixed rate mortgages.

I believe he is living in cloud cuckoo-land, as long term fixed rate mortgages will never catch on. He fails to understand that people will not commit to a long term deal which could potentially harm them in the short, medium and long term. Long term deals are potentially risky for borrowers who could be stuck in expensive deals when interest rates are falling or have to pay high redemption penalties to move house.

Currently, there are just six (out of 90) lenders who offer fixed rates for 25 years or more despite the Chancellor of the Exchequers repeated call for more long-term deals to be offered.

Mr Darling launched a Treasury consultation on long-term fixed rate mortgages which will report back in the autumn. Iin his Budget speech he said “more people should have the chance” to take out long-term fixed deals." Cloud cuckoo land is just being delayed.

Figures show lenders with 25-year deals direct to the public include Norwich & Peterborough,, Kent Reliance, Nationwide, Co-Operative Bank, Cheshire and Manchester which also offers a 30-year deal. Homebuyers in the Chancellor’s own Edinburgh constituency can only choose from four lenders as Kent Reliance and Norwich & Peterborough do not offer loans in Scotland.

I say "Certainty about monthly mortgage payments may be a good thing but borrowers should think very carefully before committing to 25-year fixed rates or any product longer than 5 years. Take Independent Mortgage Advice. The risks are clear. Not only could borrowers end up locked at a higher rate when interest rates are falling but could also find themselves having to pay redemption penalties if they want to move house. Remember that the average person stays in a house for under 7 years. It is virtually certain that people’s circumstances will change several times over a 25-year period. It will be interesting to see what comes out of the Treasury review as all the evidence so far is that the mortgage industry does not appear to share Mr Darling's ambition for such long-term fixed-rate deals. Analysis shows rates on 25-year fixed deals available direct to the public currently range from 5.5% to 6.58%. Best rates for two-year deals range from 4.75% to 5.50%. Who would commit to a higher than necessary deal than they need to. Market forces will dictate what products are avaliable to borrowers.

A suggestion to the Chancellor : As you now own Northern Rock bank, why not force them to only offer long term fixed products? Use the 'People's Bank' to see if the people take up such products. After all, if you believe long-term fixed rates are so good, your 'People's Bank' will attract so many customers that it's return to private ownership will be assured, relieving you of the burden that nationalisation of Northern Rock has cost the tax-paying public (who are also borrowers).

Mr Darling, enjoy your time in the limelight whilst you can. You will be voted out at the next General Election if you carry on with such nonsense as you delivered yesterday."