Mortgage guarantee boost for first-time buyers in Wales
The Welsh Government has unveiled plans for a new mortgage guarantee scheme to help first-time buyers and people hoping to climb the property ladder.
As part of the Wales Infrastructure Investment Plan for Growth and Jobs, the scheme will be rolled out next spring and will support the purchase of up to 3,000 new build homes up to the value of £250,000.
Rather than funding being made directly available to buyers in Wales, the Welsh Government and house builders will act as guarantors so that buyers can secure high loan to value mortgages that would not otherwise be available to them.
Buyers will contribute a 5 per cent deposit.
The Welsh Government say the scheme could enable an investment of up to £500m in housing within a three year period.
Housing, Regeneration and Heritage Minister Huw Lewis said today "the innovative scheme" is good news for potential house buyers, the housing industry and the wider economy.
"Not only will it help people whose plans for buying their first home or for moving to a bigger home have stalled due to lending restrictions from banks, but it will also provide house builders with potential new customers, and therefore will boost house building which will in turn create jobs and stimulate growth," he said.
Finance Minister Jane Hutt added: "We will now be working with the Council of Mortgage Lenders and House Builders Federation to ensure the scheme is up and running by Spring 2013.”
The Welsh Liberal Democrats put forward the scheme during budget negotiations with the Welsh Government last year.
Peter Black, Shadow Minister for Housing said it will be of "immense help" to people that want to own their house and can afford the monthly repayment, but cannot gather the deposit.
Should homeowners default on the loan, any losses would be covered by any equity they have in the property in the first instance, followed by the house builder’s indemnity fund, which equates to 3.5 per cent of the loan value.
The Welsh Government would be third in line to make good any losses.