Government backing for first-timers' indemnity

FIRST-time buyers could gain easier access to the housing market under an initiative backed by the Scottish Government.

Ministers have awarded house building body Homes for Scotland 250,000 in funding to develop a mortgage indemnity scheme, aimed at boosting the availability of home loans to those who can afford them.

The scheme would work by giving lenders reassurance that they are covered in the event of the borrowers being unable to repay their mortgage, with home builders underwriting some of the risk. The Scottish Government hopes it will encourage lenders to offer more high loan-to-value mortgages to borrowers who are unable to put down the large deposits demanded in the current mortgage market.

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Keith Brown, minister for housing and transport, said: "We want to do all we can to create new home-owning opportunities for buyers who can afford mortgages, but are currently excluded due to high deposit requirements."

Homes for Scotland is to work with lenders and builders to develop the scheme. Jonathan Fair, its chief executive, said: "We are absolutely delighted at the announcement, which we believe has the potential to make a huge difference to the health of an industry so vital to our country's social, environmental and economic well-being."

But Graeme Brown, director of Shelter Scotland, warned that the initiative could backfire, with easy access to mortgages increasing the likelihood of debt and repossession for Scottish families.

"Reducing the risk to lenders also needs to be coupled with initiatives that both reduce the risk to borrowers and provide real choice in the housing market," he argued.

"For most people, the first step on the housing ladder is not to buy, but to live in private rented or social housing. This provides a stable beginning in an environment where people can plan and save for their future."