Up to 6,000 first-time buyers and others aspiring to purchase a new build home are set to receive a boost, Cabinet Secretary for Infrastructure and Capital Investment Alex Neil revealed today.
The Scottish Government will support a three year national mortgage indemnity scheme by providing a guarantee to facilitate its launch.
It will help households who could sensibly and sustainably afford a mortgage on a new build property, but are currently locked out due to high deposit requirements.
Homes for Scotland is projecting that over three years the new scheme could create or safeguard 22,800 new construction jobs and over 650 apprenticeships.
According to the Council of Mortgage Lenders, mortgage advances to first time buyers in Scotland fell by half from 35,300 in 2007 to 16,900 in 2011.
A recent Bank of Scotland report stated that in the past 12 months almost two thirds of homeowners, looking to sell their first home and move up the ladder, have been unable to do so as they face an increasing number of financial challenges.
The scheme has been developed by home-building industry body Homes for Scotland, in conjunction with insurance specialist Jardine Lloyd Thompson.
Further details on the scheme, including eligibility, participating house builders and lenders and a launch date, will emerge following more detailed discussions with Homes for Scotland and the Council of Mortgage Lenders.
Alex Neil said:
“We know that many people who want to buy a new build home are unable to do so because of high deposit requirements.
“We want to help these people get onto and move up the housing ladder, where it is sensible and sustainable for them.
"The scheme will inject new life into the housing market, with the aim of helping thousands of households to be able to buy a new build home that they can afford.
"I also want to send a clear signal to Scotland’s housing sector that this Government will do all it can to provide the kind of solid foundations and certainty our construction industry demands.
“It is one of many innovative schemes that we will support to deliver growth, support jobs and keep our economy moving.
“I would urge lenders and house builders to embrace the mortgage indemnity scheme to make it a success.”
Homes for Scotland Chief Executive Jonathan Fair said:
“Constraints surrounding mortgage lending have proved the single biggest obstacle to recovery in the housing market.
“It has therefore taken us a huge amount of effort and innovation to get to this point so we are absolutely delighted to be leading a scheme which we believe has the potential to make such a difference to so many fundamental areas.
“Our projections show that over the next three years the new scheme could create or safeguard 22,800 new construction jobs and 650 apprenticeships.
“Whether you choose to look at the delivery of much needed new housing investment, creating jobs, stimulating the wider economy or increasing the quality of Scotland’s housing stock, the social, economic and environmental benefits of implementing MI New Home are significant.”
Paul Smee, Council of Mortgage Lenders Director General, said:
"The indemnity scheme will help to widen the availability of higher loan-to-value lending to creditworthy borrowers in Scotland. We look forward to contributing to its successful implementation."
John Yorkston, Managing Director of First Scottish Group Ltd said:
“The Scottish Government should be congratulated on this initiative to help stimulate the Scottish Housing market. The first time buyers market is critical to kick starting the housing market.
“I am sure this will be warmly welcomed by first time buyers, mortgage lenders and builders alike. I would hope in time it could be rolled out to the entire housing stock.”