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Friday 27 March 2009
Mortgage lenders and Council of Mortgage Lenders call for the government to enable first-time buyers to borrow up to 100% of the value of newly built houses.
The CML also claimed that the budget for April should include measures aimed at support of the HomeBuy Direct programme.
Let us remind that the HomeBuy Direct scheme was launched in September 2008. It allows borrowers to combine a loan of up to 70% from traditional lenders with a governmental joint loan for the remaining 30%. Buyers whose annual income does not exceed £60,000 could qualify for the programme. The Government hoped that the scheme would help an average of 18,000 first-time buyers in the United Kingdom.
Last week Margaret Beckett, Housing Minister of the UK admitted that the demand for the support scheme is much higher than the Government expected. One of the scheme developers said that approximately 20,000 potential borrowers have demonstrated their interest in the programme so far.
70% loan-to-value (LTV) mortgages are much cheaper than mortgages with a higher LTV value. Also, it should be noted that recent governmental actions resulted in prohibiting 100% mortgages. Therefore, mortgages with an LTV value of more than 95% are unavailable at the moment. The joint loan from the government, in its turn, is interest-free for the first 5 years. The only problem with the HomeBuy Direct scheme, according to brokers, is that it is only valid for newly built houses.
The CML also called for the Government to spend some of the money from the April budget on increasing the measures aimed at elimination of property repossessions.
Although at the moment, the Government offers two schemes, Mortgage Rescue and income support for mortgage interest (ISMI), for those who have temporary lost their income. The CML wants the Government to ease the requirements of the Mortgage Rescue scheme so that more borrowers can benefit from it, as well as to improve the terms of ISMI.
The Council of Mortgage Lenders also suggested that the Government increases the threshold of the stamp duty from £175,000 to £250,000 as well as introduces a flat rate for all properties at a level of 1%.
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