The initiative aims to help the government meet its target for creating two million owner-occupiers by the end of this Parliament. The Housing Corporation has invited to lenders to consult with it to prepare products before the competition launches this summer.
Melanie Bien, director of Savills Private Finance, says: “Calling the scheme a competition is laughable. The whole thing is desperate as few lenders want to get involved. The rates are high on products and they are inflexible, so most clients opt for more competitive deals.”
But Rob Clifford, chief executive of Mortgageforce, says that although it is not really a competition, the initiative should be welcomed.
He says: “It is a positive step in terms of the government’s commitment to affordable housing. However, supply of property is still the biggest problem, given the scarcity of land and the complex planning system.”
A spokeswoman for Nationwide, one of the four lenders already participating in the Open Market HomeBuy scheme, says: “We welcome any initiative to get more lenders involved in the scheme and it will be interesting to see what form the competition takes.
“But even if more lenders participate it is unlikely to drive prices down as margins on this type of business are already tight.”