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Scottish Government launches mortgage indemnity scheme

The Scottish Government has launched a mortgage indemnity scheme to help more first-time buyers get on the property ladder.

It has awarded house-building industry body Homes for Scotland £250,000 to work with lenders and builders in order to take forward the proposals.

The government says it hopes the body will develop a mortgage indemnity scheme that will result in higher LTV mortgages being available to those who can afford them.

Housing minister Keith Brown says: “We want to do all we can to create new home owning opportunities for buyers who can afford mortgages, but are currently excluded due to high deposit requirements.”

He says that when the government published its housing blueprint earlier this year, it promised to explore possibilities for the development of mortgage indemnity schemes.

Brown says: “Introducing such a scheme would inject new mortgage liquidity into the market, protect jobs and support increased supply. This would also create more activity in the building sector as builders are able to unlock land and fund increased volumes.”

Jonathan Fair, chief executive of Homes for Scotland, says: “We are absolutely delighted at today’s announcement which we believe has the potential to make a huge difference to the health of an industry so vital to our country’s social, environmental and economic well-being.

“We look forward to working with the Council of Mortgage Lenders and our partner Jardine Lloyd Thomson to finalise parameters and launch the scheme in due course.”

The CML welcomed the news, saying progress continues towards introducing a similar scheme for England and Wales, with developers and lenders actively working towards proposals for a joint initiative.

Kennedy Foster, policy consultant for Scotland at the CML, says: “We look forward to working with Homes for Scotland and its advisers on the scheme. While much work still needs to be done in developing the details, this is a promising step.”


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  • Dave 30th June 2011 at 10:09 am

    1. Builders have a vested interest in keeping house prices higher, which is what an initiative like this will help maintain (albeit, that house prices in Scotland are generally lower than some other parts of the UK).

    2. If it is government-backed, then who pays if borrowers default? The tax-payer.

    3. Although the borrower may still be liable for the debts, in practice they will probably not have the cash to repay them.

    4. If house prices continue to fall, the potantial liability on the tax payer could be huge.

    5. An insurance-backed scheme, like the old MIGs would surely be preferable but, if the insurance industry does not have an appetite to underwrite these policies, shouldn’t the Scottish government wonder why that is?

  • Jonathan Burridge 29th June 2011 at 6:29 pm

    This is non-news. They “hope” is not the same as they “are”…….

    MIG is good, we need MIG, we had MIG for years, bring back MIG. MIG is great, long live MIG…..

    BUT, for all properties and in all the UK, it is needed to help those in homes to make the next move up and that will also make more properties available for first time buyers.

  • john 29th June 2011 at 3:07 pm

    i’ve said it before that if the UK government re-introduced a MIG scheme, forcing lenders still active to charge no more than 1% more for 90% products than 75%, and the underwrote the risk, we would be quickly out of thos

  • Dan McGeehan 29th June 2011 at 2:03 pm

    Builders already have shared equity and if the aim is FTB get on the property ladder it would be better designing a scheme that enables any type of property to be purchased. Not everyone wants a new build and there are more affordable older flats and houses throughout scotland.