A new scheme designed to help first time buyers onto the property ladder launches on Monday, the aim being to help people borrow up to 95 per cent of the value of their new homes.
NewBuy will see house builders pay 3.5% of the price of a house into an account held by the lending bank. The government will also guarantee 5.5% of the purchase price.
The effect should mean that participating banks will feel confident enough to provide higher loan-to-value rates.
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The names of the participating banks are to be released later on Monday, with the scheme only available in England on flats or houses up to a value of £500,000.
The move is also likely to help the construction industry, still struggling to get back on its feet after the 2008 financial crisis.
Stewart Baseley, the Executive Chairman of the House Builders' Federation welcomed the news, saying:
"NewBuy will help thousands of people to meet their aspirations to buy a new home, freeing up the housing market and helping first time buyers and those unable to take the next step on the ladder.
"The scheme will also 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."
BS
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