Prime Minister David Cameron will today announce plans to underwrite mortgages for new-build homes in a bid to boost the ailing housing market
The mortgage indemnity guarantee scheme will reduce the level of deposit first time buyers must raise to around five per cent.
Backed by the CBI, the scheme will play a central role in the housing strategy, due to be unveiled by Mr Cameron and deputy prime minister Nick Clegg.
It sees the government cover the risk of the loan for the lender, allowing them to increase the typical mortgage from 75 per cent to 95 per cent of a homes value.
The document will also include details of a new £400 million fund stalled housing scheme, expected to deliver 16,000 homes and support 32,000 jobs, reports Construction News.
Under the new scheme, developers will be able to bid for government funds to help support projects, through a mix of loans and grants.
The government expects this to have an almost immediate impact on the housing industry.
Further details of the level of discounts available under the Right to Buy scheme will also be unveiled.
The plans are expected to provide a 50 per cent discount on council homes with the funds from each sale being used to build new affordable housing at 80 per cent of market rate.
Labour leaders were quick to attack the government’s plans.
Shadow minister for communities and local government Hilary Benn said: ‘There is a housing crisis, and yet with this government we have seen fewer houses being built and homelessness rising.
‘And while they talk about new affordable homes, they’ve actually cut the budget by 60 percent. What’s really holding house building back is the failure of George Osborne’s economic policy. It’s time he started listening to families who are desperate for a home and changed course.’