Welsh Government plans mortgage guarantee scheme

A new scheme to provide mortgage guarantees for first-time buyers for new build homes was announced by the Welsh Government on Monday. It would offer guarantees on mortgages of up to 95% loan-to-value (LTV).

Finance Minister Jane Hutt unveiled the Welsh Government’s plans to invest £15 billion in Wales’s infrastructure over the next 10 years. The Welsh Government plans to spend more than £3.5bn over the current spending review period.

Tony Filice of the Royal Institution of Chartered Surveyors in Wales welcomed the plans, but called on the Welsh Government to expand the scheme to all homes, not just newly built homes.

“What I would like to see is it to be opened up to the second-hand market because the implications of a first-time buyer buying a second-hand house is huge,” he said. “A new property helps obviously the construction industry but it’s not fair.”

The Welsh housing market is currently languishing: in real terms, average house prices in Wales have dropped 3.9% since January due to rising inflation. Sales have also fallen by 5% in the same period, according to figures released by LSL Property Services/Acadametrics today.

Richard Sexton, director of e.surv, blames the downturn in the Welsh property market on the difficulties first time buyers face in getting an affordable mortgage. “The majority of them are being priced out of the market and forced to stay in expensive rental accommodation that is a black hole for their personal finances, making it even harder for them to save for a deposit,” he said. “The lack of new buyers has caused house sales to drop well below their previous levels. It has put the brakes on activity further up the property ladder and caused the whole market to congeal.”

Other aspects of the Welsh Government’s plan to breathe new life into the housing market include creating a Welsh Housing Board and expanding the Welsh Housing Partnership.

Sources:WalesOnline; Acadametrics (PDF); ITV News

23 May 2012

The information contained within this article was correct at the date of publishing and is not guaranteed to remain correct in the present day.

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