The Prime Minister David Cameron yesterday launched a government-backed mortgage indemnity guarantee scheme which the industry believes could see 100,000 extra new home sales
Three major high street banks have signed up to the scheme, together with seven of the country’s largest housebuilders.
Barclays, Natwest and Nationwide will offer 95 per cent mortgages on new homes built by Barratt, Bellway, Bovis, Persimmon, Redrow and Taylor Wimpey.
The 95 per cent mortgages on new Linden homes will be available from Natwest only. According to the AJ’s sister title Construction News, Crest Nicholson is expected to join the scheme imminently. However it is not yet clear if other major lenders such as HSBC will sign up.
Some 50,000 construction jobs are expected to be created.
The Prime Minister said: ‘We’re delivering on our promise to offer affordable mortgages to buyers who might otherwise not be able to raise the money to buy a newly-built home.
‘It’s no good hoping people will climb the property ladder if the bottom rung is missing. Affordable properties and available mortgages are vital.
‘So we’re working with leading house builders and lenders to get the scheme underway.
‘It’s a vital boost to the housing market, giving people good affordable new homes and backing thousands of jobs in construction in the process.
‘This government doesn’t just talk about expanding home ownership: we’re making it happen.”
The government has also announced details of its plans to reinvigorate the Right to Buy scheme for council properties, increasing the discounts up to 75,000 and guaranteeing that additional properties sold are replaced with new affordable homes.
Housing minister Grant Shapps said the government was ‘determined to maintain the number of affordable homes for rent’ and pledged to get ‘the nation building again’.
Industry groups welcomed the news having lobbied for government action on mortgages even before the coalition took office.
HomeBuilders Federation executive chairman Stewart Baseley said: ‘NewBuy will help thousands of people to meet their aspirations to buy a new home, freeing up the housing market and helping first time buyers and those unable to take the next step on the ladder.
‘The scheme will also provide a vital kick-start for the house builders large and small who will be able to build the homes and create the jobs that the country desperately needs. The government deserves credit for backing NewBuy and enabling it to become a reality; it shows that housing is in its rightful place at the top of the political agenda.’
Britain’s biggest housebuilder Barratt Developments said the scheme had already attracted ‘huge interest’ from potential buyers.
Chief executive Mark Clare said: ‘This is potentially a real boost for home buyers who have been locked out of the housing market by the high level of deposits required to buy a home.
‘The key thing is that people will no longer need deposits of up to 20 per cent which gives creditworthy buyers the best opportunity for five years to get on the housing ladder.
‘This is also a great way to get the economy moving whilst tackling the housing shortage. We know that building homes creates local jobs so it’s good news for everyone in the industry.’