Monday, 30 March 2015

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.’

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