House magic won’t work

The government's NewBuy scheme to get more people onto the property ladder is set to get underway. But it's not such a good deal for first-time buyers, says Merryn Somerset Webb.

Next week marks the launch of NewBuy, the government's new plan to help first-time buyers on to the housing ladder. The big idea is to underwrite a portion of a new mortgage on a new-build house, so shifting the loan-to-value (LTV) ratio and allowing even buyers with a small deposit to get a loan.

It works like this. The buyer puts down a 5% deposit on a new-build. The bank lends the remaining 95%, but the government and house builders backstop nine of those percentage points. The house builders take on the risk of 3.5% by putting the equivalent in cash in an indemnity account, and the government guarantees another 5.5%. The result? A bank can offer a 95% mortgage but only be on the hook for an 86% loan. Magic.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.