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Help to buy scheme launches amid interest rate controversy

Posted by Lisa Morton Oct 8, 2013 3:43:00 PM

Topics: News, property, government, mortgages, help to buy

Help to buy, the government's landmark mortgage assistance scheme, will launch its second phase today (October 8th) amid worries about high interest rates.

The Prime Minister and Chancellor announced the commencement of the programme this morning and several high street banks are set to unveil new mortgage products designed to help first-time buyers this week.

help_to_buy_is_a_mortgage_assistance_scheme

David Cameron claimed that there was a clear need for the government to help hardworking people who are finding it "impossible" to get on the property ladder.

"From today, thousands of people will be able to get a foot on the housing ladder by applying for the new Help to Buy mortgage guarantee. If you've got five per cent of the funds for a mortgage deposit, we're providing a guarantee to the banks to help you get the rest," he said.

Chancellor George Osborne also weighed in on the launch, explaining that the roll-out had been brought forward to help the plethora of people that are still being "denied the dream" of owning their own property.

However, industry commentators have been quick to note the interest rates associated with help to buy products are still relatively steep.

BBC News business editor Robert Peston suggested that the high rates could leave banks open to accusations that they are charging above the odds for such mortgages.

In his exploration of the scheme's implications, he went on to suggest that the Treasury could also benefit from recurring revenues associated with the programme - potentially earning hundreds of millions of pounds in the process.  

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