UK launches programme to help home buyers
LONDON (AP) - Britain's government launched on Tuesday a 12 billion-pound (S$24 billion) programme to help first-time homebuyers, a landmark plan that tries to offset banks' reluctance to lend but which critics argue could create a new property bubble.
Under the plan, potential homebuyers will only need to put up 5 per cent of the home's value, rather than the standard 20 per cent that most banks are demanding. The government will guarantee the remaining 15 per cent in the event of a default.
The government started this portion of the programme earlier than planned after the first phase, which offered government loans to help buyers of newly built homes make their down payments, proved very popular.
Critics suggest the programme, called Help to Buy, will fuel a surge in the market, where prices are already increasing even though the economy remains weak. Fears of a new housing bubble are growing.