Further plans to relieve pressure of crashing mortgage market

16 July 2008 / by Rebecca Sargent
The Government has today announced a series of measures and reforms intended to relieve some of the pressure being felt by Brits as the housing and mortgage markets deteriorate.

The new measures were announced today by Housing Minister Caroline Flint and look set to make life slightly easier for first time buyers that have been hit hard by a sudden lack of mortgage products and increased set-up fees.

Recent research from the Royal Institute of Chartered Surveyors (Rics) found that a first time buyer couple in the bottom quarter of earners in the UK would need to save 100 per cent of their joint income (£27,516 after taxes) just to afford the up front buying costs typically involved these days.

Consequently, the measures announced today include a new scheme intended to support first time buyers. The scheme (Rent to Home Buy) will be available to households earning £60,000 a year or less and will enable them to rent a new home at a discounted price for two to three years before being given the option to buy a part share in the home.

Other measures proposed by the Government in attempts to save the housing market, include the delivery of 75,000 new homes in 20 cities and towns, and new plans for the Government to work with local authorities and housing associations to examine proposals for mortgage rescue schemes and how they could support UK homeowners at risk of repossession.

Talking of the proposals, Ms Flint said: "The package being announced today will both help people facing difficulties right now, and lay the foundations to help meet the long term housing needs of the country.

We are determined to continue to do everything possible to promote long-term stability and fairness in the housing market. The international credit crunch has created significant challenges not just for the UK housing market, but in other parts of Europe and the United States.

She concluded, however, that "the long term need to provide more homes has not gone away. We have a growing and ageing population and will only see worsening affordability unless we increase housing supply."

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