by Mark Johnston
People in England are being offered help to climb on to or up the housing ladder as the government’s new mortgage indemnity scheme launches.
Building firms and the tax payers will be co-guarantors on new homes bought by existing or first time buyers.
Under the scheme the builder pays 3.55 of the sale value and the tax payers will provide additional guarantees of 5.5%, but that money will be called upon only in the event of a major property crash.
Property experts believe the governments new mortgage scheme could help to kick start the property market and give a much needed boost to the wider economy.
Housing minister, Grant Shapps, said “the average age of first time buyers has risen dramatically as people could not afford deposits” he added “I am not prepared to stand by nor is the government, to watch an entire generation of people be locked out of the housing market when they can afford a proper mortgage”.
David Cameron, the Prime minister, said of the scheme, “strong families and stable communities are built from good homes. That’s why I want us to build more homes and I want more people to have the chance to own their own homes”. He also added “it is no good hoping people will climb the property ladder if the bottom rung is missing”.
Figures compiled for the House builders Federation (HBF) suggest that approvals for homes in development of 10 or more have hit a 5 year low of 115,412.
Stewart Baseley, executive chairman of the House builder Federation (HBF), said “this is a stark reminder as to why the government must stand firm and deliver a robust and adequate planning system”.
However, the National Trust said the figures “did not make clear how many planning applications were submitted overall and there is no mention of the 300,000 approvals existing for houses that still have not been built”.
Critics have argued that the scheme is just a ruse to help the construction industry.
Dominik Lipnicki, of your mortgage decisions, said of the scheme “it is more of a gimmick. It is a great headline and it will help some but mainly the construction industry. All this will do is encourage people to buy new properties but old properties will then not be sold and the chain will stop.
Some say ‘it is not a scheme that is going to change the housing market. It is there to support house builders, not necessarily to support home buyers as a priority’.
Alastair Stewart, housing analyst at broker Collins Stewart, says “from a home buyers point of view there is a very real chance of instant negative equity. Like buying a new car, the price will plunge when the buyer
Story link - Will the New Mortgage Scheme be a Boost for Buyers?
Related stories to : Will the New Mortgage Scheme be a Boost for Buyers?