David Cameron and Nick Clegg will pledge to break the “current cycle in which lenders won’t lend, builders can’t build and buyers can’t buy” when they unveil the government’s new strategy.
That will mean people who “play by the rules” can “expect to own a decent home of their own”, they insist. The £400m ‘Get Britain Building’ fund will target housebuilding schemes that have stalled through a lack of development finance.
It is set to “unlock” the construction of up to 16,000 homes and around 3,200 of those would be affordable properties, Downing Street said. The cash injection would also support up to 32,000 jobs, according to officials.
The government will carry the risk of some lending on newly-built homes, according to the Independent. It is hoped the move would help first-time buyers get on the property ladder by allowing deposits to drop from 20 per cent to as little as 5 per cent.
Details are set to be released later.
Economics Editor Faisal Islam asks who the new mortgage scheme will benefit: “In 2008 at a time when Gordon Brown was pushing a UK-style Freddie/Fannie through the Crosby mortgage review, Mervyn King said: ‘We don’t guarantee lending to other forms of borrowing; we don’t guarantee lending to manufacturing borrowing, there is no reason why in the long run you need to have any guarantee of lending to the mortgage market.’
Fannie and Freddie collapsed into US nationalisation three weeks later.”
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