by Mark Johnston
The economy has affected millions: costing jobs, forcing growing families to live in cramped conditions and leaving young families with out much hope that they will ever own a home of their own.
The housing market is one of the biggest victims of the credit crunch: lenders will not lend, so builders can not build and buyers can not buy.
With the average first time buyer battling rising rental costs whilst trying to scrape together a deposit, it seems that every time they get near a mortgage they get priced out again.
According to the latest statistics from the National Association of Estate Agents (NAEA) just 16% of all new house sales in October 2011 went to first time buyers, 6% lower than September 2011.
The problem can come from buy to let investors who have a decent flow of capital and therefore an easier means of borrowing.
The government’s new scheme aims to change all this, by underwriting mortgages worth hundreds of millions of pounds on new build homes, thus enabling first time buyers with only a 5% deposit to own a home.
Under this mortgage indemnity scheme the government will underwrite a percentage of each loan on a newly built property, meaning buyers will not have to raise as much towards a deposit.
Mr. Cameron and Mr. Clegg said that their plans are designed to spread opportunity in society. They added that “for too long, millions have been locked out of home ownership. We want to build an economy that works for everyone, one in which people who work hard and play by the rules can expect to own a decent home of their own”.
The government has also stated that landlords will not be allowed to participate in this new scheme. Buy to let investors have had their pick of the crop over the last few years, they believe it is now time to let aspiring home owners on to the ladder.
The Council of Mortgage Lenders (CML) has put its support behind these ideas, Paul Smee CML director general said: “this scheme is good news for home buyers, developers and indeed the UK economy”.
Graham Beale, chief executive of Nationwide echoed this statement by adding “this scheme seeks to boost the supply of properties available with modest deposits and as such, we are pleased to be part of it, helping to shape its design and development”.
Labour however believes that the current government has not got a grip on the housing problem and therefore the situation will only get worse over time.
Many other experts also believe that this scheme will not massively help as it only deals with the deposit issue and not the lending problem.
Another train of thought towards this scheme is that the taxpayer could be forced to bear some of the loss if the housing market suffered another
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