- 6 updates
The Chancellor has met lenders and builders to discuss details of the Government's mortgage guarantee scheme:
The Chancellor has issued details to lenders of the Government's Help to Buy mortgage guarantee scheme in a meeting at No.11, the Treasury said.
George Osborne is meeting major housebuilders and mortgage lenders today to discuss an extension to the Government's flagship housing stimulus programme.
The 'Help to Buy' scheme is available to first-time buyers and existing homeowners on properties worth up to £600,000.
How does it work?
- The first stage of Help to Buy, offering loans to buy a new-build home with a deposit of just 5%, launched in April
- Government loans up to 20% of property value, interest-free for five years, to boost a buyer's deposit
- Scheme credited with spurring a surge in home sales and driving up prices
- The second stage of the scheme, 'mortgage guarantees', is due to launch in January
- Will see state take on risk of default by borrowers by guaranteeing proportion of loan
- Scheme aims to boost mortgage availability by reducing risk for lenders
- Will be extended to existing homes, not just new-builds
- Criticisms include risk of creating housing bubble and piling huge housing risk on Government
- Pete Redfern, boss of Taylor Wimpey, said scheme could be a "hazard to the economy" unless a clear exit plan is laid out
- Former Bank of England governor Lord King warned scheme is "too close for comfort"
Mortgage lenders say they still don't have all the details they need to participate in the Government's new housing scheme.
The Council of Mortgage Lenders said the Help to Buy mortgage guarantee scheme, which is due to launch in January, must have a "clear exit strategy" and not create a housing bubble.
"Lenders, whether they choose to participate in the guarantee scheme or stay outside, will continue to do their utmost to meet households' needs for mortgages, but always in a way that is responsible," said CML director general Paul Smee.
George Osborne is set to announce more details on the scheme today.
A National Housing Federation report has said that the Chancellor's Help to Buy scheme does not address the root of the housing crisis:
The Chancellor will host a round table meeting with major mortgage lenders and home builders to deliver details of how the Government's 'Help to Buy' scheme will work ahead of the lending under the guarantee to start from next January.