First-time buyers trying to raise a deposit to get a foot on the housing ladder are to receive a helping hand from taxpayers.
First-time buyers biggest barrier to entry to the property market is the current high deposit demands needed for a good mortgage rate. The benchmark sum needed to be raised is 20 per cent of a home's value, according to industry figures, which means potential homeowners need to save £26,000.
The Coalition is today expected to start a scheme to underwrite mortgages worth hundreds of millions of pounds for new homes.
David Cameron will promise tough action to help young people own their home.
Smaller deposit mortgages are still available, but at a much lower level than before the credit crunch arrived and they come with interest rates of almost double those charged to borrowers with larger deposits.Under the new mortgage indemnity scheme, likely to be introduced in conjunction with housebuilders, the Government will underwrite a percentage of each loan on newly built property – meaning buyers will not have to raise as much towards a deposit. They would be able to get more mortgages at up to 95 per cent loan to value.
