UK Prime Minister David Cameron (pictured) was yesterday scheduled to announce state-backed mortgages that will enable home buyers with small cash deposits to acquire loans of up to 95 percent of the value of a newly built house.
The government will underwrite part of the mortgages to buyers of new homes, in order to boost housing development.
Instead of the standard £40,000 (S$80,000) deposit, which borrowers previously needed for a £200,000 (S$395,623) house, they can now acquire a home with a deposit of only £10,000 (S$19,780).
The programme is expected to help up to 100,000 buyers and support about 50,000 jobs in construction and associated industries.
The Council of Mortgage Lenders (CML) revealed that the lenders expected to provide home loans under the government proposals include Nationwide Building Society, Barclays plc and Royal Bank of Scotland Group plc’s NatWest Home Loans Ltd.
Mike Farley, Chief Executive Officer of Persimmon plc, the largest homebuilder in the UK by market value, said the programme will help those purchasing a home for the first time as well as those looking for larger properties.
“It has no salary cap and is available to purchasers of new homes up to the value of £500,000 (S$989,059),” said Farley.
“Initial rates from the large high-street lenders to support this product look very favourable.”
Around 20,000 people in England have already registered with Barratt Developments plc, the country’s largest homebuilder by volume, to purchase their homes using state-backed mortgages.
Related Stories:
US govt, banks ink US$25b mortgage agreement
HKMA advises against low mortgage rates
Rising mortgage rates threaten UK economy