Britain launches Help to Buy mortgage scheme
UK lenders hesitant despite the lure of capital relief while critics say scheme is election gamble
Britain yesterday launched a much debated programme to help people buy their own homes and set out the small print it hopes will persuade more of the country's big banks to take part.
RBS and Lloyds, both of which are part-owned by the government, have said they will start marketing state-backed "Help to Buy" mortgages this week. Smaller lenders Virgin Money and Aldermore have also agreed to sign up.
But talks with other big lenders have gone down to the wire.
Banks such as Barclays and HSBC want to see how much capital they must set aside to cover loans to homebuyers who may put down deposits of as little as five per cent.
Prime Minister David Cameron and his finance minister George Osborne brought forward the launch of the programme to this week from its original start date in January. They dismiss concerns that the programme will fuel a boom-bust cycle in British housing. They say it will help people who have been frozen out of the property market by the big deposits sought by banks which remain wary after the financial crisis.
Critics say the plan was rushed out to give the government a boost ahead of a 2015 general election. The opposition Labour party says Help to Buy will not fix the fundamental problem of low levels of housebuilding.
