Friday, 01 August 2014

Firm chosen to run government mortgage scheme

A consultancy specialising in risk management has been appointed to run the government’s mortgage indemnity guarantee scheme.

The Home Builders Federation has appointed Jardine Lloyd Thompson Group to develop and manage the initiative, which will see mortgages on new build homes underwritten by house builders and the government.

Chancellor George Osborne announced the mortgage indemnity scheme in his autumn statement last month. It is being jointly set up by the HBF and Council of Mortgage Lenders, and is designed to encourage lenders to offer mortgages covering 95 per cent of the value of a property to make it easier for first-time buyers to get finance.

The government hopes the scheme will support 100,000 mortgages.

Steven Rance, partner at JLT, said: ‘This risk management solution, created in response to the reduced availability of mortgage funding for home buyers with small deposits, will reduce lender risk at higher loan-to-value ratios and so allow lenders to offer 95 per cent LTV mortgages for new home buyers at more competitive rates.’

JLT will develop a legal framework, structure, bank accounts and systems for the initial scheme, which is expected to last three years.

Stewart Baseley, executive chairman of the HBF, said: ‘The lack of high loan-to-value mortgages has been a major constraint on new home sales for the last four years. The indemnity scheme should provide a significant boost to new home sales over the next three years.’

Readers' comments (3)

  • F451

    And JLT's fees will be?

    And the board and shareholders are?

    I may be a sceptical old goat but is it wrong of me to suspect that a considerable amount of trouser stuffing may be going on this Christmas?

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  • Frankly, you could set up such a scheme in the car on the way home from work. The trick is for CML to tell us all what level of mortgage discount will their participating members provide for the benefit of the indemnity and what level of insurance savings will they make in recognition of the underwriting of risk (or are these likely to be one and the same thing?)

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  • Ah consultants! Always excellent value for money. Well, I suppose no banks wanted to step up, since they manage their risk so well.

    This shall be an amusing new year.

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