Britain's state-backed lenders are bracing themselves for a flood of
interest as a £12 billion scheme helping homebuyers obtain mortgages worth up
to 95% of property values is launched by the Government today.
The new phase of the controversial Help to Buy scheme will see up to 15%
of a property's value guaranteed by taxpayers, in return for a fee from the
lender.
Taxpayer-backed Royal Bank of Scotland and its subsidiary NatWest
immediately set out mortgage deals under the scheme and announced that 740 of
its branches would extend opening hours for two weeks to cope with expected
demand.
While the government’s plan to give more people the
chance to get on the property ladder is commendable, there are some puzzling aspects
of this scheme.
For starters requiring buyers to put down just a 5%
deposit for home and obtaining a mortgage for the other 95% seems unsustainable
long term, particularly if interest rates go up.
Also the upper limit for this scheme will allow
buyers to get one of these mortgages for a home worth up to £600,000, now if you
can afford the monthly repayments for a £600k mortgage do you really need help
buying a home? I don’t think so.
This scheme will most likely result in a short term
boom followed by another bust, followed by politicians and economists bleating
about how they never saw it coming, who knows maybe one day a lesson will be
learned, but it doesn’t seem like it’s been learnt just yet.
No comments:
Post a Comment