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Industry warns FirstBuy initiative will have little impact in isolation

The government’s FirstBuy initiative is a the drop in the ocean in terms of how many first-time buyers it will help, say mortgage trade bodies.

Chancellor George Osborne announced the £250m scheme in last week’s Budget. He estimates it will help 10,000 first-time buyers pur-chase a newly-built property.

Under the scheme buyers will have to put down a 5% deposit, while the government and home builder each put in 10% in the form of a low-cost loan.

The loans will be interest-free for five years and then charged at around 1.75%, rising by 1% above inflation each following year.

Peter Williams, executive direc-tor of the Intermediary Mortgage Lenders Association, says the scheme is a step in the right direction but urges the government to address the underlying mortgage funding drought.

He says: “The govern-ment must see FirstBuy as one of a number of mecha-nisms to help the mortgage and housing markets as it will have little impact in isolation.

“Osborne estimates it will help around 10,000 borro-wers, but that would only equate to a 5% rise in the number of loans to first-time buyers compared with 2010.”

He would like to see the govern-ment properly address the funding issue in the mortgage market and better support the wholesale funding sector.

Robert Sinclair, director of the Association of Mortgage Interme-diaries, says the move will only aid a small number of buyers and the government should be wary of helping to shift new-build properties that have been hard to sell.

He says: “The problem we face is lenders saying that funding is available and brokers struggling to get customers through their stringent lending criteria.

“The Budget is a missed opportunity to ensure more lending from both state-owned lenders and those that may benefit from the FirstBuy scheme.”



SMI extension prompts calls for its rate to be increased

The government has been urged to increase the rate at which Support for Mortgage Interest is calculated, following the extension of the scheme in last week’s Budget. Under the system, unemployed home owners can claim up to 100% of their interest payments after 13 weeks of unemployment on mortgages up to £200,000. The 13-week period […]



Lloyds group has done the sensible thing in shutting down C&G and I don’t get how brokers can accuse it of turning its back on them. Meanwhile, Accord and Skipton have got some great deals going


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