Councils underwrite mortgages for first-time buyers
A PAIR of North West local authorities have announced mortgage indemnity schemes aimed at injecting vitality into local housing markets.
LIVERPOOL City Council has announced a £3m scheme to help homebuyers get on the property ladder.
The money will be used by the council to underwrite mortgages to reduce the amount that first-time buyers have pay as a deposit.
The council said that the money, which is being provided as part of its Housing Delivery Plan, could help more than 200 buyers to get onto the market.
The city council will underwrite ‘top-ups’ of up to 20 per cent on loans so that first-time buyers currently only offered mortgages for up to 75% of a property’s value will be able to access 95% mortgages on similar terms.
It will place the £3m in a high interest account, which will only be called upon to cover defaults. Any profit from interest earned will be ploughed back into the scheme.
Liverpool City Council leader, Cllr Joe Anderson, said: “We are determined to stimulate the housing market here and to do all we can to support those who wish to buy a home. This scheme is an important part of our plans for achieving that.”
Meanwhile, Oldham Borough Council has also said that its cabinet will next week discuss establishing an ‘Oldham Mortgage’ on similar grounds.
The council said that if its proposals are approved, it will be the first council in Greater Manchester to launch such a scheme, although reports have suggested that Manchester City Council has been working on a similar project with the Co-operative Bank and Manchester Building Society.
Oldham Council is working with Lloyds Bank on its scheme, which is expected to be launched in April. It will cover up to 50 houses for the first five years of ownership, which is when homes are most at risk of repossession.
Oldham Council leader Cllr Jim McMahon said: “Many people who want to get on the property ladder, including those who are renting from private landlords are unable to save a big enough deposit, even though they could afford mortgage repayments. This initiative is designed to bridge that gap.”
Both authorities have said that their schemes are not eligible for new-build properties, for which the Government is offering its own mortgage indemnity scheme.
