The Daily Telegraph headline “£500,000 home loans to be backed by the taxpayer” brought some cheer to an otherwise grey morning this Monday 17th March 2012.
Apparently David Cameron is keen to bring life back to the middle bracket of the homes market.
The NewBuy Guarantee scheme proposes to guarantee part of a homebuyer’s mortgage allowing them to take out much larger loans than they would otherwise have been eligible for.
New build properties can be bought under the NewBuy scheme with up to 95% mortgage finance. The Government will guarantee the final 15% allowing buyers to purchase with a 5% deposit and mortgage lenders to lend more than the 80% which is currently their norm.
Government statistics show that the average age of a first time buyer has soared to 37 over recent years as would-be homeowners have struggled to save the 20% deposit needed in order to take out an 80% mortgage.
The NewBuy scheme is aiming to kick start 100,000 purchases of new homes. Let’s hope that red-tape won’t slow down what appears, on the face of it, to be an imaginative initiative.