David Cameron announces 95% mortgages for first time buyers

David Cameron and Nick Clegg have today announced that they are to introduce a tax-payer backed 95 per cent mortgage in order to help “unstick” the housing market.
The announcement is said to “make the dream of home ownership a reality for more people” and will tackle the housing shortage, give the economy a much needed boost, create jobs and provide people with more opportunity to get onto the housing ladder.
According to both Cameron and Clegg the plan will break the current ‘lenders won’t lend, builders can’t build and buyers can’t by’ cycle that is pervading the housing market.
With banks demanding deposits which are not far off the average person’s annual salary, before tax, first time buyers are being held back so, for first time buyers at least, this could be welcome news.
The scheme will allow a first time buyer to secure a loan on a new build property with a 5 per cent deposit.  There could be an issue though.  If the housing market were to suffer a ‘downturn’ the taxpayer could be left to foot the bill, again.
Campbell Robb, Chief Executive of Shelter, according to an article in The Guardian commented:
"We are concerned that schemes to help first-time buyers and council tenants will simply encourage people to overextend themselves, while doing nothing to address the sky-high cost of housing.
This strategy also does almost nothing to help the growing number of families living in insecure private rented housing with hardly any protection from rogue landlords or unexpected rises in rent. Unfortunately these aren’t the bold and radical solutions we need to solve a housing crisis that’s been decades in the making."
Today’s Conveyancer would be very interested to hear what you think of the new scheme.
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