Barratt price guarantee and stamp duty subsidy

Commenting on the implications of Barratt Developments' price guarantee and stamp duty subsidy, Louise Cuming, head of mortgages at moneysupermarket.com, said: "From Barratt's results, it is clear it needs to increase business - and this is an interesting move that should certainly help.

As far as prospective purchasers are concerned, the fear of negative equity on a new build is a genuine barrier to them taking the plunge. Offering a price guarantee for three years should restore confidence for a Barratt home purchase, and there is the extra carrot of no stamp duty up to a realistic maximum of £500,000.

"While it's good to see bold moves from house builders, there needs to be support for new builds from lenders. Barratt's plan will fall at the first hurdle if applicants cannot get an appropriate mortgage. This time last year, there were no restrictions in terms of the maximum a lender would grant for the purchase of a new build, whereas now we're seeing a squeeze in this area of the market. Abbey and Bristol & West, for example, have restricted their lending on newly built properties to just 75 per cent.

"Spooked lenders are clearly concerned there is a premium for new build properties which means second hand values may not be as full. However the need for such significant deposits to purchase new build properties is a real kneejerk reaction that isn't in line with the risk."