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Economist dismisses help schemes for UK mortgages

Fionnuala Earley, Chief Economist at Nationwide, said she is surprised by support for these kinds of ideas. Although a stamp duty holiday was introduced by the government in 1992 to try to kick starts the market, it had little impact, she said.

'Things fell back down to the previous low levels and I'm not sure that it will do much in the market at the moment. I think what it would do is only attract those marginal buyers who are perhaps on the edge of buying anyway,' she said.

'The amount of money that somebody would save, even as a first time buyer, isn't a great deal of money to give them the extra money to go towards a deposit in the current market. So I think it will have limited impact. I think if you want to enter the market you want to do so prudently, then perhaps you should be saving up in advance rather than deferring it until afterwards,' she added.

With threatened repossessions now reaching their highest levels since the last property crash in the early 1990s, Earley still believes that if the UK does go into recession it will be milder. The latest figures put re-possession orders at 39,000 while the Council of Mortgage Lenders is predicting they could reach a high of 45,000 this year.

The Nationwide estimates that falls in prices will continue in 2008. For 2009 conditions are difficult to predict and Earley is cautious. 'Looking forward into next year, then obviously what we would want to see before the market began to recover was a significant change in that sentiment,' she explained.

'Some of those factors may be around the corner. We're starting to see oil prices coming down. If that means that the Bank of England can reduce rates quite rapidly, then that could have quite a swift impact on the market. But it also depends on global conditions and there are so many uncertainties out there at the moment it's very difficult to say,' she said.

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