Forming part of a wider strategy to build more homes and boost home ownership, the new mortgage indemnity scheme aims to help up to 100,000 people in England get on the property ladder by the Government underwriting part of the risk to lenders.
The proposal states that purchasers - most of whom are expected to be first-time buyers - will be able to borrow up to 95% of their value.
Eddie Goldsmith, Partner at Goldsmith Williams and chairman of the Conveyancing Association, said:
“First-time buyers have been at risk of becoming an endangered species, so this latest announcement to tackle the problem is a great boost to the industry.
However, while he welcomes the proposals put forward by David Cameron, he is keen to point out that existing homeowners should be not be overlooked in the push to get Britain building again.
"While much is being done for first-time buyers there are hundreds of thousands of people across England who are in a position where they cannot move to a bigger property because they are either in negative equity, or because they are unable to afford the large deposits required upfront due to the equity in their existing home having been eroded.
"For these people, finding the finance to move can be difficult. Even remortgaging can be a nightmare because of the reduced levels of loan to value being offered by lenders.
“Indeed, from Goldsmith Williams’ perspective, which is one of the largest conveyancers in the country, we have seen the number of purchases and remortgages remain static over the 12 months to November this year in comparison to the year before.
"Our concern for those looking to trade up or remortgage has been echoed in our conversations with mortgage brokers who are worried that this area of the market could stagnate.
“The house buying market has been ailing in recent years and the Government needs to ensure that it works to stimulate the sector as a whole and not just focus on individual elements of it.”
