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"
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