Similar to the mortgage market his business has seen a gradual improvement in 2009 as consumer confidence has risen.

But lurking in the not-too distant future are issues that could have a dampening effect on his business and the economy.

First, the reintroduction of full VAT will have an effect on confidence, but I was surprised to hear the government is thinking of boosting VAT to above its original 17.5% level.

This would be seen as a cynical move which takes advantage of the financial crisis - a classic example of providing a spoonful of sugar along with some nasty medicine.

Next, the decrease in the threshold at which Stamp Duty comes in will have a negative impact on potential first-time buyers. And higher earners will be hit with bigger tax bills from April, with a knock-on effect that can't be quantified at this stage.

Meanwhile, swap rates are on the up and no doubt Bank of England governor Mervyn King's comment that inflation will rise above 2% quickly next year will push them up even further.

The housing market has enjoyed a good run in the past six months but the next six will be more challenging. Chuck in a general election and you have a pretty unsettled period. Don't kid yourself, the next six months have some significant downside risks.

Copyright: Centaur Communications Ltd. and licensors

(c) 2009 Mortgage Strategy. Provided by ProQuest LLC. All rights Reserved.

A service of YellowBrix, Inc.