Details sketchy on ‘new’ Help to Buy

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George Osborne

The Council of Mortgage Lenders (CML) has welcomed the progress report announced by the Chancellor George Osborne today at a meeting with representatives of lenders and housebuilders on the government’s new Help to Buy mortgage guarantee scheme, due to launch in January.

However, full details on the extended scheme are not fully available as yet.

The CML has been advising government on a whole range of operational issues that need to be resolved, to enable lenders to participate in the scheme. Some of the necessary details are now becoming available, and the CML hopes that the government will shortly be able to confirm the remaining details, particularly the commercial fee for participation and how capital relief will work, to enable lenders to make an informed choice about their participation.

The CML has consistently emphasised that, to be successful, the Help to Buy mortgage guarantee scheme needs to:

· be straightforward for lenders to implement and administer (particularly given the short timescale available within which systems changes need to be made);
· have clear success criteria, and a clear exit strategy – the three-year nature of the scheme is subject to review by the Financial Policy Committee; lenders do not expect to see the scheme become permanent or semi-permanent by default; and
· be accompanied by an equivalent government focus on the supply of new housing (not just the supply of credit), to avoid the unwelcome effects that stimulating demand without also increasing supply would create.

CML director general Paul Smee said: “The mortgage market is open for business, and it is clear that government support has helped to create more favourable market conditions for home-buyers. Lenders, whether they choose to participate in the guarantee scheme or stay outside, will continue to do their utmost to meet households’ needs for mortgages, but always in a way that is responsible.”

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