Monday, June 20, 2011

“FirstBuy – a government-backed schemeto offer a valuable alternative to the Bank of Mum and Dad”

Shapps launches FirstBuy scheme

Housing minister Grant Shapps has launched the government’s FirstBuy scheme and confirmed that over 100 housebuilders will be taking part. The scheme was announced in this year’s Budget and aims to help first-time buyers get on the housing ladder by providing a 20% equity loan from the government and a housebuilder, which together with a 5% deposit from the borrower will allow them to take out a 75% LTV mortgage. Loans will be repaid on resale of the property, with the government’s share available for reinvestment in more affordable housing. The first homes are expected to come on stream in September this year.

Posted by jack c @ 01:37 PM (2748 views)
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23 thoughts on ““FirstBuy – a government-backed schemeto offer a valuable alternative to the Bank of Mum and Dad”

  • mark wadsworth says:

    Should read: “Housing minister Grant Shapps has launched the government’s FirstBuy scheme and confirmed that over 100 first time buyers will be taking part.”

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  • What a waste of effort. It is amazing that they do not do any market research before launching into yet another pet project at tax payers expense.

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  • cornishtinmine says:

    The Govt. are clearly worried that prices will fall further and more banks will get into trouble…

    You just have to ask yourself “why are banks not willing to lend the full 95%?”!

    …also the 5% equity will be wiped out when the first time buyer receives the keys, as you pay a premium for new-build – and they are often of inferior quality to existing stock…

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  • cornishtinmine says:

    … maybe “Mum & Dad” are not willing to lend either as they can see what’s coming??

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  • mark wadsworth says:

    Cornish: “The Govt. are clearly worried that prices will fall further and more banks will get into trouble… “

    Well that’s the thing – if they were worried about price falls, they wouldn’t (or shouldn’t) be doing it.

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  • cornishtinmine says:

    I agree – but they are desperately trying to talk and prop up the market as they know that taxpayers stand to lose a hell of a lot more if Lloyds and other banks find themselves in difficulty again…

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  • More fascism through blackmail then.

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  • Keeping the market in this state of mark to make believe is actually causing the economy much damage at this very moment at time as it is preventing productivity.

    There needs to be a realization that adjusting the books accordingly instead of burying ones head in the sand is this country’s real path to success.

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  • mark wadsworth says:

    Cornish, the idea that Lloyds would lose vast amounts of money if house prices fell, or that this is in any way the taxpayers’ problem are yet more myths bandied about by the Home-Owner-Ists, they are simply not true. Really, this is all just propaganda to justify the unjustifiable – i.e. throwing taxpayers’ money at banks and at home owners.

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  • This is just an exercise in being seen to do something (but without spending very much..) that appears to have emanated from the Treasury

    It falls to our Grant to present the thing, but the last time I saw him talking about it, he was struggling to look enthused..

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  • I first read this headline and thought – this will only work if prices rise, which would involve banks lending more which thry won’t.

    But then of course I realised that no-one put into positions of power ever has more than about a 24 month time scale in mind and will quite happily make a situation worse long term if they can just sort out the short term fix.

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  • And I wish they’d stop calling it a ladder.

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  • Ladder = Ponzi

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  • “And I wish they’d stop calling it a ladder”

    Yes – it ran out of rungs years ago..

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  • It’s more like 2 Fireman’s poles now.

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  • So the Tories are any better than the last lot?

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  • Thought you guy’s might like Harry Katz comments at the end of this recent FTAdviser article

    First-time buyer figures for May at all-time low

    A tightening of lending criteria meant that fewer than ever first-time buyers got onto the property ladder in May, data from e.surv has revealed.

    Its figures showed that purchase approvals for homes under £125,000 accounted for only 23 per cent of all purchase approvals in May, compared to 27 per cent in April, and below the average for the last year.

    The tightening of lending conditions was most pronounced at the bottom end of the market where loan-to-value products decreased or remained flat on all house price bands up to £376,000.

    The average LTV for first-time buyer properties under £125,000 fell more sharply from 67.8 per cent in April to 67.1 per cent, meaning fewer low-income buyers were able to secure a mortgage.

    Richard Sexton, business development director of e.surv, said lenders needed to be more aware of the appetite for new mortgage business.

    He said: “With base-rate hikes seemingly off the agenda for at least another six months, it is great timing for homeowners and buyers to benefit from falling mortgage rates.

    “Those with the least equity in their homes need cheaper rates most, so it is important lenders do not make it too difficult to qualify for the best mortgages. Tightening criteria in May is going against this grain. Some lenders are ahead of the pack and are offering good deals, but for others it is not enough just to advertise a good headline rate.”

    Harry Katz, principal of London-based Norwest Consultants, said: “The reason people are finding it harder to get onto the property ladder is because of the amount of student debt, which is the government’s fault, not the lenders.

    “But people need to be sensible. For example, a single person doesn’t necessarily need to own their own house, as you cannot predict the future.

    “I would advise people to go to a good IFA as early as possible and get the smallest mortgage they could possibly manage over the shortest possible time. Either that, or emigrate.”

    SOURCE – http://www.ftadviser.com/FinancialAdviser/Mortgages/Products/FirstTimeBuyers/News/article/20110616/344fc968-937a-11e0-8a0d-00144f2af8e8/Firsttime-buyer-figures-for-May-at-alltime-low.jsp

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  • I am so disappointed in this government, didn’t think they would waste money on harebrained schemes and try to con the public the way that Labour did but they’re catching up. What’s the point of making cuts to vital services if you’re going to carry on like this?

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  • a saver,

    If you look at the detail, virtually all the cash being put up for this scheme is expected to come back home, and the attraction is so limited it will probably be heavily undersubscribed – in the overall scheme of things, the cost to the taxpayer is likely to be peanuts..

    ..it’s all about being seen to be ‘doing something’ when in truth they know that the market needs a heavy correction, but they can’t admit as much..

    ..such is politics!

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  • Uncle tom, yes sure you are right but all govt schemes are wasteful, aren’t they? And it’s the deceit that’s really annoying.

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  • a saver,

    When you’re young and idealistic, these things really annoy; but when you’re a little older and wiser, you start to say ‘yep, they say that because they have to and they do this because they have to’

    – however, rather than live in a state of apoplexy, awaiting one’s untimely cardiac arrest as a result, it is better to consider what CAN be done, within the confines of our democratic system – instead of pondering what MIGHT be achieved, were we to move to a utopia that will never happen.

    The acceptance of life’s horrid truth can be a little depressing at first, but once you get past that, and focus on the do-able rather the possible, you will find that the people who really do make the big decisions are much more interested in your point of view…

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  • Off-topic, but has anyone else noticed this site is increasingly unavailable (time-outs, etc) between about 7:30AM and 9AM?
    It’s not my internet connection. It happens at home and at work! I wonder if it is a government ploy!

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  • mark wadsworth says:

    To paraphrase Uncle Tom: “when you’re a little older and wiser, you start to say ‘yep, they say that because they are told to and they do this because they have to’… The acceptance of life’s horrid truth gets more depressing the older you get, but if you ever get past that, and focus on the do-able rather the possible, you will find that the people who really make the big decisions only care about themselves, and they have stooges in government who only care about staying in government as long as possible and then getting lots of lovely directorships or a job with the EU once they are voted out. They are only interested in your point of view to the extent that they want to know how much of their propaganda has rubbed off.”

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