An ambitious initiative designed to make housing more affordable has been unveiled today. The proposals include the introduction of a taxpayer backed 95% loan to value (LTV) mortgage to be made available to up to 100,000 buyers.
Since the credit crunch it has been difficult for many buyers to find a willing mortgage lender with anything less than a 20% deposit, leaving many potential homeowners locked out of the mortgage market.
It is hoped that the proposals will make it easier for buyers to gain a foot in the door of an increasingly difficult housing market and give a welcome boost to the economy. The new mortgage deals will only be made available to those looking at buying new properties.
In a bid to tackle property shortages £400m will also be injected into new build projects helping to kickstart stalled housing developments, with a view to providing up to16,000 additional new homes and supporting up to 200,000 new jobs. A further £150m will be spent put on bringing disused properties back into use.
According to Prime Minister David Cameron and Deputy Prime Minister Nick Clegg:
"The housing market is one of the biggest victims of the credit crunch: lenders won't lend, so builders can't build and buyers can't buy."
Critics of the scheme have pointed out that a downturn in the housing market could have repercussions for the taxpayer who may left partially responsible for any losses incurred. However, buyers would first lose their deposit and any loss would be shared with the lender.
Shadow chancellor Ed Balls called the proposals "small beer" in an interview for BBC R4's Today programme, but backed the plans as a "good start".
In a joint authored foreword to the new proposals Cameron and Clegg explain:
"For too long, millions have been locked out of home ownership. We want to build an economy that works for everyone[...] With this strategy, we will unlock the housing market, get Britain building again, and give many more people the satisfaction and security that comes from stepping over their own threshold."