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Govt set to unveil fresh plans to boost housing market

Prime minister David Cameron will announce plans to boost the housing market on Thursday, with a particular emphasis placed on first-time buyers.

Ideas are still being thrashed out, according to a report in the Mail on Sunday, although it is thought one idea is to extend the NewBuy scheme, where the state underwrites some of the risk of the purchase, by introducing a “buyers’ bond”.

In March, the Government launched its flagship housing scheme, NewBuy, in an attempt to boost the housing market. Under the scheme, announced in the government’s housing strategy last November, lenders will offer 95 per cent loan-to-value mortgages for new-build properties against a mortgage indemnity guarantee funded jointly by house builders and the government.

As part of the plans, Cameron will also announce a relaxation of planning laws, making it easier to build on the 6,000 square miles of Green Belt around towns and cities.

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  • John (Chichester) 4th September 2012 at 4:22 pm

    Buyers bond? Surely the retained value in the property should be sufficient security IF they anticipate values will hold. Trouble is they don’t. So they’d rather entice the unwary FTB with a questionable security, hoping to drag them into paying over the odds for a property that only aids their chums the builders. In doing so they attempt to maintains a false valuation. Let’s see house prices fall to an affordable level based on REASONABLE and sustainable lending criteri.

  • John (Chichester) 4th September 2012 at 4:22 pm

    Buyers bond? Surely the retained value in the property should be sufficient security IF they anticipate values will hold. Trouble is they don’t. So they’d rather entice the unwary FTB with a questionable security, hoping to drag them into paying over the odds for a property that only aids their chums the builders. In doing so they attempt to maintains a false valuation. Let’s see house prices fall to an affordable level based on REASONABLE and sustainable lending criteri.

  • jon 4th September 2012 at 2:41 pm

    You cannot encourage prices to fall – the majority of people are not in a position to sell thair property for less than they paid for it / the amount of the mortgage.

    As to affordability lending at around three times salary has been used for affordability when interest rates were 15% and also now when they are at less than 5%.

    When there was self cert people inflated their salaries and this in part pushed up property prices – those prices are not going to come down significantly – they are more likely to stay flat. To improve affordability you need to increase lending multipliers and this needs to be linked to the security of a long term fixed rate.
    A MIG scheme for high percentage borrowing may help but I suspect people will object to the premiums – in some respect the higher interest rates on higher LTV is the equivalent of a MIG premium.

    At some stage we will see inflation as a result of the QE, and in the meantime we need to help more people to be able to afford to buy a home, particularly FTBs – current lending criteria does not do this.

  • GHU 4th September 2012 at 11:50 am

    If the Government truly want to do something to kick start the housing market why don’t they offer a good old fashioned indemnity scheme. The lenders could charge the indemnity fee which is remitted to the State and a fund that could be built up to cover claims. There is an issue as to whether such a scheme could be abused by lenders but this could be covered off by a commercially written indemnity agreement that would leave some liability with the lender if they made reckless loans. Like it or not, old style indemnities actually made money for insurers before the last crash of the early ‘90’s. There can be lots of argument regarding the losses made due to that crash but we are not seeing the massive losses on property that where inherent during that period.

    It is a risk, as all indemnities are, but it would be a way of offering higher LTV loans to allow FTBs to compete with BTL landlords for the properties at the lower end of the market. If we get FTB’s into the market they will then release others to move up market and so on. A far healthier, and proven, way of moving the market rather than short term schemes designed to benefit developers.

    The problem with inexperienced persons such as Cameron and Osborne (and that goes for the other lot as well) is that they have never worked in the real world and are far too young to remember the good things that history has taught us. Indemnities are not bad if they are managed properly and could be a good way to get things moving without massive expenditure.

  • Marcus Jones 4th September 2012 at 11:19 am

    I just really do not get this! The housing market is stagnant because sellars/estate agents and builders are trying to sell overvalued properties. Instead of encouraging the price to fall to affordable levels, they want people to take on more debt via concealed means!! Those saying banks are not lending are talking out of their rear. Banks are lending!!! But will lend based on the indidivudals affordability, what we would consider as responsible!! Find me one person with good credit history that can’t get a mortgage and i will find you a Unicorn! The property is valued at what people can afford, not what estate agents/sellers and builders want to sell at to make a very nice profit.

  • Anonymous 4th September 2012 at 7:24 am

    Its interesting to consider why lenders have not done as another anonymous poster has suggested and allow higher salary multiples at a longer fixed rate. This would help if one wanted to keep the current prices up until inflation worked to reduce the debt. I suspect this is the plan of the powers that be.

    However they won’t do this until they have rebuilt their balance sheets. Being able to claw in higher IR payments with near zero base rates is allowing lenders to recapitalize. Once this process of recapitalizing is finished, then they will be able to lend more. At that point they might put more effort in finding ways to lend more to people at these current high price levels.

    The problem currently is that wages are falling or flat in real terms, so while houses are also falling in real terms, it doesn’t help new buyers.

  • jon 3rd September 2012 at 5:25 pm

    With interest rates expected to remain low for some time there is a strong argument for lenders to increase their multipliers to say four times salary and link this with a long term fixed rate. We are in the current situation because of inflated salaries on self cert and unless people can borrow more than three times income the market will drift for a number of years.

  • Bobby 3rd September 2012 at 2:09 pm

    Cameron and Osborne. We would have more chance with the Chuckle Brothers in charge.

  • Stephen Mokhof 3rd September 2012 at 12:53 pm

    What the government need to do, is not offer rubbish schemes on rubbish new built properties, they need to offer a scheme that helps FTB’s purchase second hand properties as there is lots of them about and better built quality too!

  • Stephen Mokhof 3rd September 2012 at 12:53 pm

    What the government need to do, is not offer rubbish schemes on rubbish new built properties, they need to offer a scheme that helps FTB’s purchase second hand properties as there is lots of them about and better built quality too!

  • Ellen1001 3rd September 2012 at 12:01 pm

    The government are not there to underwrite bad investment decisions. The best thing they can do is leave well alone, let the buy to let investor take the hit when it comes, and not dupe unsuspecting first time buyers or the unfortunate taxpayer.

  • Ellen1001 3rd September 2012 at 12:01 pm

    The government are not there to underwrite bad investment decisions. The best thing they can do is leave well alone, let the buy to let investor take the hit when it comes, and not dupe unsuspecting first time buyers or the unfortunate taxpayer.

  • James Smith 3rd September 2012 at 11:41 am

    If the government want to help the housing market then butt out and let prices collapse.

  • Thomas Dobner 3rd September 2012 at 9:49 am

    If the Government want to help “the housing market” they need to come up with a scheme to promote the purchase of second hand properties, not New Builds.

    A first time buyer being assisted to purchase a brand new property does not kick-start a chain of home sales & purchases, it is a single one-off transaction and results in a FTB, of which there are precious few, who has not contributed to the general housing market regeneration.

    NewBuy is more about helping large building companies than it is about helping the economy.

  • old cynic 3rd September 2012 at 9:25 am

    “Ideas are still bering thrashed out! are they ?

    more like

    ” Bunch of numpties with no idea are still desperately scrabbling around for half-assed idea to get peple into ever more unsutaiable levels of debt in desperate attempt to reflate housing asset bubble.”

  • paul jones 3rd September 2012 at 9:23 am

    so to help the market, they are going to extend a failed scheme.. bring back FirstBuy instead, much better.