Grant Shapps calls for more ‘mates mortgages’ to help struggling first time buyers

Housing Minister Grant Shapps will today call on lenders to offer ‘mates mortgages’ so younger first time buyers can club together and take their first step on the property ladder.

With new research published today showing 86 per cent of people want to buy a home, Mr Shapps wants lenders to make it easier for friends who would like to buy a house and can afford the repayments, but are locked out the market by the requirement for a large individual deposit.

For groups of friends without access to the Bank of Mum and Dad, mates mortgages could become a mainstream alternative to years of saving, as well as providing a welcome boost to the housing market.

The Minister wants more lenders to offer straightforward mortgage products such as Britannia’s ‘Share to Buy’, so increasing the number of these schemes that facilitate joint ownership will be the top item for discussion when he meets key housing and mortgage industry figures for a second First Time Buyers Summit.

He will also urge lenders to replicate a new ‘First Time Buyers Pledge’ by Lloyd’s. Under the pledge more advice and assistance will be available to prospective homeowners, including a personal action plan for unsuccessful applicants setting out how they could be successful in the future, and a promise that failed applications will not affect the credit rating of first time buyers.

The summit been arranged by Mr Shapps to review progress since he made a rallying call to the housing industry earlier this year to step their efforts and help more prospective first time buyers fulfil their dream of buying their own home.

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FirstBuy allocations confirmed

Over 100 house builders and housing associations are set to offer extra help for first time buyers as the Homes and Communities Agency confirmed allocations for the Government’s FirstBuy scheme today.

A total of £180m has been allocated to provide nearly 10,500 new homes for sale with the help of an equity loan across England over the next two years. The successful bidders are a mix of housing associations, major housebuilders and smaller local building firms.

FirstBuy was announced in March’s Budget as a new equity loan scheme specifically designed to help first time buyers struggling with the need for a large deposit, while simultaneously supporting economic growth by giving house builders the confidence to progress developments. Under the scheme an equity loan of up to 20% of a home’s value is jointly funded by the HCA and the house builder, meaning the taxpayer’s contribution is matched by the private sector.

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Number of first-time buyer mortgages on the up

The number of mortgages available for first-time buyers has nearly trebled during the past two years, figures showed today.

There are 183 different products aimed at people taking their first step on to the property ladder, up from 62 in June 2009, according to financial information group Moneyfacts.co.uk.

First-time buyers have been hit hard by the credit crunch as lenders have become more risk-averse and pulled deals that required little or no deposit.

But there are signs that banks and building societies are tentatively re-entering the market for people with only a small amount to put down, and there are now 31 different loans available for people with a 5% deposit.

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First time buyers’ mortgage approvals increase

Chartered surveyors are reporting a sharp rise in mortgage approvals, suggesting that first-time buyers are finding it easier to get on the house price ladder once again.

Research from chartered surveyors eSurv showed that approvals rose by 4.3pc in March compared with February, while those with smaller deposits are finding it easier to take out a home loan.

The year-on-year comparison is more positive too, with decline slowing to 0.6 per cent compared to March 2010, the slowest year on year decline since it began falling in May 2010.

According to the survey, the volume of high loan to value mortgages has increased. The number of people buying with a deposit of 10 to 15 per cent grew a third faster than average. It is generally first-time buyers, with smaller deposits, who take out this type of loan.

Cheaper properties were also popular, with those up to £125,000 accounting for a third of all mortgage approvals. According to the Council of Mortgage Lenders (CML), the average first-time buyer mortgage is £100,000, while the average mortgage for a home mover is £130,000.

Richard Sexton, business development director of eSurv, said that more first-time buyers were jumping in thanks to record rents, and more high loan-to-value products on the market.

Source: The Telegraph

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£250m plan to get first-time buyers on to property ladder

First-time buyers struggling to raise a deposit received a budget boost with the announcement of a new scheme to help them get on to the property ladder.

The Government has earmarked £250m from the Bank Levy to help around 10,000 households with incomes of up to £60,000 buy a new-build property.

Under the FirstBuy initiative, buyers must save a deposit worth five per cent of the property’s value, with the Government and housebuilders putting up 10 per cent each through an equity loan, enabling people to qualify for 75 per cent loan-to-value mortgage. The equity loan will be interest-free for the first five years.

The Government hopes the scheme will also provide a boost to the construction industry and support up to 50,000 jobs, after the number of new homes that were built fell to their lowest peacetime level since 1923 last year.

The initiative is almost identical to the Homebuyer Direct scheme that was launched by the previous government in 2009. Around £275m of funding was made available for that project and it has helped 9,000 people to buy their first home.

The Council Of Mortgage Lenders welcomed the announcement, saying it would provide ‘modest help’ for first-time buyers.

A spokeswoman said: “Every little helps, but it is not going to fundamentally change the landscape.”

Claire Jarvis, sales manager for Persimmon Homes North West, said: “We recognise how important first-time buyers are in sustaining the property market and the prediction that FirstBuy is expected to help 10,000 families get on to the property ladder is welcome.”

John Cosgrave, managing director of Warrington-based, Arley Homes, said the policy will be some benefit to the market as a whole but would not impact Arley directly:

“The Government has made a commitment to help get the market moving, which is something we have long been calling for, and I’m glad to see it comes in the form of practical support for first time buyers who are in desperate need of help and are the foundation blocks of the housing market.

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