Housing market experts welcome new Homebuy scheme

Posted: 04 Oct 2006 17:28:18 GMT

Leading property market specialists have welcomed the launch of the government's new Open Market Homebuy scheme.

Leading property market specialists have welcomed the launch of the government's new Open Market Homebuy scheme.

Ray Boulger, senior technical manager at mortgage broker John Charcol, said that the new initiative would provide a "lifeline" to those struggling to get a foot on the property ladder.

"It really is a useful additional product for those with limited options and the modest amount of funding available is likely to be substantially oversubscribed," he explained. "The early repayment charges mean that borrowers must see this as a five-year commitment, which comes at an affordable cost when compared with standard 100 per cent mortgages."

However, moneyfacts.co.uk mortgage analyst, Julia Harris, claimed that the Open Market Homebuy scheme "only scratches the surface" and efforts to confront the problem of home ownership need to be stepped up to make a real difference.

She added: "As with any shared ownership scheme, the complexities may put borrowers off, and with the target audience of this scheme already a niche market, we wonder how many first time buyers will truly benefit. Surely by assisting only a fraction of first time buyers facing affordability problems, for those excluded from this scheme the problem only worsens, with increased demand, however small, stimulating further prices rises."

Under the new scheme, key workers and other eligible parties, will be able to secure a 25 per cent loan in order to help them purchase their first home.

This means that potential first-time buyers will only be required to secure a deposit for 75 per cent of the property, while the remaining funding will be provided by the lender and the government and buyers will not be required to start paying it back for five years.

A total of four UK lenders have signed up to the scheme to date and more are expected to announce that they are offering the loans, as part of nationwide efforts to tackle the growing problem of affordability in the housing sector. Government HomeBuy Agents will assess applications for eligibility.

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