The Equity Loan scheme, launched on April 1, has seen around 400 people already reserve a new home using the Equity Loan part of the Government’s flagship Help to Buy scheme.
The Help to Buy scheme has two parts to it. The Mortgage Guarantee element is due to start next January and is aimed at stimulating the whole housing market.
In the meantime, the Equity Loan part – under which Government helps the purchasers of new build homes secure a mortgage with at least a 5% deposit by granting an equity loan of up to 20% – has got off to a ‘flying’ start. (More details on both schemes at foot of release.)
Interest has been huge and there are now on average around 500 people a week taking advantage of the scheme. Large deposit requirements have been the biggest barrier to people’s ability to buy, and thus builder’s ability to build. The Equity Loan scheme – allied to the industry’s NewBuy scheme that has had over 4500 reservations – means people can get onto or up the property ladder with a 5% deposit. And because buyers only require a 75% first-charge mortgage under the Equity Loan scheme, homes are very affordable.
House building levels in England are currently around half (115k p/a) those needed to meet the formation of new households(220k p/a)1. Just 88k private for sale homes were built last year. Since 2007 output has dipped to levels not seen since the 1920s, with the resultant social and economic implications. But with effective measures now in place to support demand, and consumer interest increasing, the industry is confident supply can be increased.
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