LONDON – Britain’s government is launching a 12 billion-pound ($19 billion) program to help first-time homebuyers, a landmark plan that tries to offset banks’ reluctance to lend.
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 program Tuesday — 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 program, called Help to Buy, will fuel a surge in the market, where prices are increasing even though the economy remains weak.