Monday, 30 September 2013

Help to Buy (England)

In a further development in the Help to Buy debate David Cameron has announced that, as the Conservative party conference gathers in Manchester, the state-backed lenders, Royal Bank of Scotland and Lloyds Banking Group, have signed up to the Help to Buy (England) scheme and that the launch date has been brought forward from January.

The Help to Buy mortgage guarantee scheme follows the smaller Help to Buy equity loan scheme which began in April.

Help-to-Buy will initially be available under the NatWest, RBS and Halifax brands but a Tory spokesman said that other banks are expected to take part over time.

The scheme will help people buy any home worth up to £600,000 with just a 5pc deposit.  The Government will guarantee the next 15pc of the loan for a fee, reducing the banks' potential losses so they can offer cheaper mortgages to higher-risk customers who are currently locked out of the market.
The deal will be available for £12bn of guarantees on up to £130bn of mortgages and remain open for three years.

The Help to Buy scheme is proving more controversial in England with concerns being expressed that the scheme risks inflating a housing bubble particularly in London and the South East and exacerbates affordability issues.

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