Mortgage lenders urged to act for first-time buyers

MORTGAGE lenders will be called to Whitehall this week for a summit to help Britain’s first-time house buyers.

 Grant Shapps has called a top level brain storming session to get the market moving Grant Shapps has called a top-level “brain-storming ­session” to get the market moving

With lending to new homeowners at a fresh low, Housing Minister Grant Shapps has called a top-level “brain-storming ­session” to get the market moving.

Lenders, bankers and political think-tanks will be asked to find ways to remove barriers to home ownership that have seen the average age of a first-time buyer rising to 37.

Mr Shapps said: “Home ownership is such a basic right, it is not like some ­luxury item you can easily live without.

“I am not ideologically attached to any particular form of home ownership but it is important to meet people’s aspirations.

“The job of government is not to tell ­people where to live or how to live but it is to try to meet the aspirations that your citizens have.

“In our case, a lot of people quite rightly want to own their own home. I think people appreciate the security of home ownership and it is therefore ­the Government’s job to find ways to make that happen.”

‘Home ownership is such a basic right’

Grant Shapps

He said Tuesday’s summit would not be about laying down the law to lenders but finding “creative solutions” to ending the mortgage drought for 1.4 million first-time buyers. Top of the agenda would be exploring ways to roll out an expansion of shared ownership schemes, which allow buyers to gain a foothold by purchasing a percentage of a property.

The summit will also look at ways to save first-time buyers from having to find deposits of more than 20 per cent.

Proposals will be drawn up to restore trust in mortgage insurance schemes which would reduce risk and encourage banks to lend. Mr Shapps said: “It is not really used in this country, even at its height only one in five buyers insured themselves, but it would be one way to say to lenders it reduces the risk.

“If buyers are prepared to take mortgage insurance then you can afford to lend because even if there was a default everyone is insured.”

The minister described the situation facing young buyers as “horrendous” and warned without a steady flow of people on to the property ladder the whole market could freeze up.

He said: “First-time buyers have a ­leveraging effect on the housing market and it so happens that first-time buyers disproportionately go for new homes so it’s an important economic driver. It is all part of the growth agenda.”

The summit comes amid fears that regulations proposed by the Financial Service Authority’s Mortgage Market Review could see first-time buyers reclassified as a risk category. Mr Shapps has urged the FSA to relax its proposals.

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