MEDIA RELEASE
Issued by:
Councillor Simon Holbrook
Date of Issue: April 14th 2011
Contact numbers:
07786 676177
Lib Dem office: 0151 691 8544

MORTGAGE SUPPORT FOR FIRST TIME BUYERS

At its next meeting on 18th April, Wirral Council is set to debate a Liberal Democrat Notice of Motion on mortgage support schemes to help first time buyers onto the housing ladder.

Liberal Democrat Leader and Deputy Leader of the Council, Councillor Simon Holbrook is proposing the Notice of Motion. He said, “First time buyers are crucial to the buoyancy of the whole of the housing market – without people joining the market by buying houses on the first rung, the market stagnates, preventing others from moving up the housing ladder. We also know that it is very difficult to save enough for a deposit when mortgages are only being offered at around 75% of property values.

“What we are proposing it that, in addition to the £250 million ‘First Buy' Government support announced in the Budget for first time buyers of new build properties, the Council joins a scheme already operating in other parts of the North West by investing £5 million to ‘underwrite' part of the mortgage for first time buyers of older properties with ‘top up' loans of up to 20% of their mortgage.

“It's being tried elsewhere, it's a low financial risk to the council taxpayer, and it would bring income into the council through interest charged on the loans. Most importantly of all though, it will help young homebuyers into their first properties whilst supporting and stimulating the local housing market and benefitting the wider local economy.”

The full text of the Notice of Motion to be debated at Full Council on 18th April follows:

    MORTGAGE SUPPORT FOR FIRST TIME BUYERS

    Proposed by: Councillor Simon Holbrook
    Seconded by: Councillor Alan Brighouse

    Council:

    1. Welcomes the ‘Lend a Hand' local authority mortgage scheme, currently being piloted in the North West in Warrington and Blackpool (as well as Northumberland County Council, Newcastle under Lyme Borough Council; and East Lothian Council) .
    2. Notes this scheme is aimed at first time buyers finding it difficult to raise the 20-25% deposit needed to obtain an affordable mortgage interest rate. These NW pilot authorities have each pledged £5 million to ‘underwrite' part of the mortgage for first time buyers, excluding new build properties, by loaning applicants up to 20% of a first time buyer's mortgage, by lodging the funds with the lender. Council notes that interest is paid on the money pledged at a rate of 4.2%.  Council also notes that, based on current repossession rates (according to The Council of Mortgage Lenders), the risk to local authorities is around 0.3 per cent – or £3,000 for every £1 million invested.
    3. Also welcomes the £250 million ‘First Buy' shared equity scheme announced in the Coalition Government Budget and financed by the Bank Levy to help around 10,000 new homebuyers purchase newly-built houses and flats with loans of up to 20% of the property's value to put down as a deposit on a mortgage. Council notes the scheme, designed to support the mortgage and housing market, will only be open to those with a household income lower than £60,000, and homebuyers would also have to put down their own 5% deposit, bringing the total deposit up to 25%.
    4. Believes that, taken together, these two schemes have the potential to support housing markets in areas at risk of housing market failure, stimulating the local housing market and benefitting the wider local economy .
    5. Therefore, instructs the Director of Finance and the Interim Director of Corporate Services to bring forward a report outlining how these schemes could be implemented in Wirral, identifying the funds that would need to be made available, both for investment and as a reasonable provision to mitigate against the risks of repossession.