£500000 home loans backed by the taxpayer as NewBuy Guarantee scheme launched

£500000 home loans backed by the taxpayer as NewBuy Guarantee scheme launched David Cameron will today formally open the NewBuy Guarantee scheme, where the Government guarantees part of a homebuyer's mortgage, allowing them to take out much larger loans than they might otherwise be eligible for. The decision to set a higher limit was taken making sure that people in London and the south-east of England are able to benefit from the scheme. Ministers are also understood to be keen to ensure people from middle-class backgrounds who might aspire to more expensive homes are not excluded. Some senior Conservatives are concerned that recent economic trends have made it impossible for even young people with university degrees and professional jobs to follow the example of previous generations by buying their own home. "We want to help everyone achieve their aspirations, and feel the pride of home ownership. The guarantee scheme was first promised last year as part of a wider Coalition move to restart the housing market. Nonetheless, the Council of Mortgage Lenders has backed the scheme as "good news for home-buyers". Mr Cameron will also say that the Coalition is "rebooting" the rules that allow tenants in council-owned properties to buy their homes. Discounts available under the rules - intoduced by the Thatcher government - will be trebled, offering a maximum discount of £75,000. Formally launching the mortgage guarantee today, the Prime Minister will today pledge that the NewBuy scheme can certainly help repair a "broken" housing ladder. "It's no good hoping people will climb the property ladder if the bottom rung is missing. "Strong families and stable communities are constructed from good homes. Significantly, the upper limit on property values will be set at £500,000, higher than some observers had expected. According to the Government, the average age of a first-time buyer is now 37 in some parts of the UK. Rising rents are also skewing the market against owner-occupiers, making it harder to save and attracting growing numbers of buy-to-let investors. The Home Builders Federation said NewBuy will "provide a vital kick-start for house builders large and small who will be able to build the homes and create the jobs that the country desperately needs. A study of mortgage data yesterday revealed that banks and building societies are now lending more money to buy-to-let landlords than people who want occupy their property. Grant Shapps, the Housing Minister, said the guarantee scheme can certainly help unlock a housing market where for many people, owning a house is "no longer a dream, but a distant fantasy. High inflation and squeezed wages mean that even people with salaries that would allow them in order to meet monthly mortgage payments can struggle to save such a sum. Paul Smee, the CML director general, said the new mortgages can help "creditworthy borrowers who simply haven't yet managed to construct up a large enough deposit to gain access to finance to buy a newly built home. He added: "Borrowers need to understand the implications of high loan-to-value borrowing, so we will be supporting the initiative with clear consumer information to help people decide whether NewBuy borrowing is an attractive option for them. However, it could also raise fears that the State could end up making sure more risky borrowers. Some estimates advise you on that the average deposit necessary for a mortgage is close to £38,000. Today's launch is going ahead despite reports that some mortgage lenders are wary of participating in the scheme: so far, only three mortgage lenders have signed up to take part. £500000 home loans backed by the taxpayer as NewBuy Guarantee scheme launched Trade News selected by Local Linkup on 12/03/2012