Martin Lewis has set the record straight after the government released some 'irresponsible' advice for first-time buyers. The Money Saving Expert founder was back at the helm of Good Morning Britain alongside Susanna Reid on Monday (September 3) to offer his expert advice in a special cost of living episode.
Ever since the mini budget was announced on September 23, worry has mounted amongst homeowners and first-time buyers. Mortgage lenders have been wiping deals off the market following predictions that the Bank of England could raise interest rates to as high as 6 percent, with a record loss of 1,621 mortgage deals in less than a week, reports PA news agency.
As homeowners fear their mortgage repayments could rise by another £100 a month, first-time buyers are now worried that they will no longer be able to afford a home as rising mortgages could price them out of the market.
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During his co-hosting role on the ITV programme, Martin Lewis addressed a 'nonsense' message that the Treasury had put out to first-time buyers. As part of the mini budget, Chancellor Kwasi Kwarteng announced a cut to stamp duty tax with the threshold for first-time buyers increasing from £300,000 to £425,000.
In a post on Twitter, the Treasury wrote: “Thanks to the Growth Plan, a typical first-time buyer in London moving into a representative terraced house will save £11,250 on stamp duty & £1,050 on the household’s energy bills – and if they earn £30,000 almost an additional £400 on tax. This is around £12,700 in total.”
But the consumer champion was in complete disagreement and slammed the message as ‘fundamentally irresponsible’ which could give some people 'false hope' during the cost-of-living crisis.
Whilst interviewing the Chief Secretary to the Treasury Chris Philp on Good Morning Britain, Martin Lewis said: “Now, on my calculations, to save £11,250 on stamp duty you have to be buying a house as a first-time buyer of £500,000 or more.
“The cheapest fixed-rate mortgage on a £500,000 property with a 10% deposit leaves you with payments of £2,400 a month, which is £28,000 a year.
“But your example is for somebody who earns £30,000 a year. Clearly, they would not get that mortgage. And clearly on £30,000 a year before tax you cannot pay a mortgage of £28,000 a year.
“This seems fundamentally irresponsible for the Treasury to be putting out this kind of statement in the middle of a cost-of-living crisis.”
The MoneySavingExpert.com founder told Mr Philp: “I’m guessing you don’t know about it. But what do you think of your own department putting out these types of messages?”.
Mr Philp responded: “Well, you’re right, I haven’t seen it, and I’m afraid I can’t see it on the screen because there’s no screen where I’m standing in Birmingham.
“But I imagine, I’m just sort of speculating, when they used the £30,000 to work out the tax saving, they were doing that to illustrate the income tax saving of someone on approximately medium earnings.
“You are right to point out that someone on that particular level of earnings would be unlikely to be able to get a mortgage to fund a £500,000 house, unless, of course, they were doing so with a partner, but I suspect that’s why they did it.”
Mr Lewis replied: “It doesn’t mention the partner’s income and the headline includes all the savings added in one…”
He later asked Mr Philp: “Can I ask you to look at those messages? These are big, bold messages… to have them taken offline in the middle of a cost-of-living crisis, where they give people false hope?”
He added: “Can I ask you to personally take a look at that? It seems irresponsible at the moment.”
Mr Philp said: “You’re right to point out the anomaly between the salary and the house value and I’d be happy to take a look at it.”
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