From yesterday's Evening Standard:
GEORGE OSBORNE’S new Help to Buy London mortgage scheme could reduce first-time buyers’ monthly repayments by up to half, a top broker said today.
New buyers with a five per cent deposit can apply for government zero-interest equity loans of up to 40 per cent of the value of the property from today. Only having to find a mortgage for 55 per cent of the property will allow young buyers to access more attractive mortgage offers, said Ray Boulger, technical director at broker John Charcol.
On a £500,000 home, buyers with a five per cent deposit will need a £275,000 mortgage, compared with £475,000 without government backing. The Government’s equity loan is interest-free for five years and then has a rate of 1.75 per cent, rising by the level of RPI inflation plus one per cent each year. Help to Buy is available on new-build properties inside the M25 worth up to £600,000.
So even by their own admission, it will push up prices quite significantly; prices being the inverse of the effective interest rate.
And what a coincidence that Conservative mayoral candidate Zac rocks up for a photo shoot on the very day that the Conservative national government put this wizard wheeze into effect.
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