Chancellor George Osborne explained in his Autumn Statement on Tuesday just how important it is for the UK to be able to borrow money cheaply. An increase in market interest rates of 1% would add an additional £10 billion to contractor mortgage bills each year, costing the average family an additional £1,000.
Mr Osborne went on to say that the Government plans to take advantage of these low costs to help first time buyers. The mortgage guarantee scheme will help 100,000 families purchase newly built properties. Not surprisingly, shares in Britain’s house builders rose of the news. Barratt Developments and Taylor Wimpey saw their shares go up by 4%, whilst Britain’s largest house builder, Persimmon’s shares rose 3%.
The mortgage indemnity guarantee scheme is reasonably big news for first time buyers. Providing them with help to secure a mortgage should open up the lower end of the housing market somewhat.
The Chancellor also announced a £400 million fund to help construction firms get their projects off the ground. The money will help companies that have been unsuccessful in their attempts to raise money from their bank. Projects that have already received planning permission will now be able to go ahead.
A spokesperson for Persimmon said the Autumn Statement contained positive news for the construction industry and homebuyers. Mortgage lending institutions will be able to lend up to 95% on newly built properties and first time buyers will not need to find high deposits.
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