George Osborne has announced plans to underwrite £130bn of mortgages and inject £3.5bn directly into shared equity schemes.
The chancellor revealed the two strands under the new Help to Buy initiative this afternoon. The first part will be £3.5bn of capital funding over the next three years, starting next month.
It will be used to cover up to 20 per cent of a shared equity loan, and reduce deposits to 5 per cent for all new-build buyers – not just those buying their first home. It will apply to homes up to £600,000.
Mr Osborne said it will be available to “anyone looking to get on or move up the housing ladder” and will be a “great support to housebuilding”.
The second strand is government guarantees to back £130bn of mortgages, which have been a major constraint to housebuilding.
Mr Osborne said it will means using the government balance sheet to push down deposits.
The scheme would start in early 2014 and run for three years. Any future government would need the permission of the Bank of England’s Financial Policy Committee.