The government have introduced a new mortgage indemnity scheme whereby the State will act as guarantor for 100,000 mortgages for buyers of new homes.
Conveyancing Partner, David Walton, comments “Although this was originally intended for first time buyers it has now been extended to all buyers of new homes costing up to £500,00. This is part of a £400 million strategy to get the economy and particularly the housing market moving again.”
This scheme will allow buyers of new homes to borrow up to 95% of their value, and the government will underwrite a proportion of this. Potential buyers would contribute a 5% deposit. Lack of mortgage availability since 2008 has been ‘the biggest constraint’ on new homes, according to the House Builders Federation, with banks demanding deposits of up to 20% of the value of the property from first time buyers. The National Housing Federation has called the scheme a potential ‘game changer.’
In addition the government has allocated £400M funding for developers to build up to 16,000 homes, providing work for 32,000 people. Although they are not setting any targets it is hoped that 450,000 affordable homes will be built by 2015. Whilst rents and prices have remained high and mortgage lending restricted the number of new homes being currently built is at its lowest since World War II.
The Prime Minister told the Confederation of British Industry that when first time buyers cannot get a mortgage the whole market grinds to a halt. He said that then “ricochets around the economy affecting builders, retailers, plumbers – all the people that depend on a housing market that is moving.”
For a free initial meeting please call 01202 499255 and David or a member of his team will be happy to discuss any questions you may have.
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