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Last Updated: Monday, 5 December 2005, 18:56 GMT
Lenders join shared equity scheme
Prospective buyers viewing house
Many families have been unable to keep up with rising house prices
Three new lenders have joined the government's HomeBuy scheme, offering 20,000 shared equity mortgages.

From October 2006 Nationwide, HBOS and Yorkshire Building Society will all offer the HomeBuy mortgages to first-time buyers.

Under the shared equity scheme, buyers could take a 75% mortgage with the remaining 25% covered by an equity loan from the lender and the government.

HomeBuy is designed to create an extra 100,000 homeowners by 2010.

Chancellor Gordon Brown announced that the three lenders were joining the HomeBuy scheme during his pre-Budget report speech to the House of Commons.

Mortgage lender Abbey pulled out of the scheme in August, saying it was not cost-effective and was limited by the small number of families it could help.

But the plan has been welcomed by people struggling to get on the housing ladder.

"There are lots of first-time buyer homes being built locally, but at 160,000 they are expensive," said Becky Thatcher, a young mother who is currently living with her fiance at her parent's house in Swindon.

"It is hard to save a big deposit, so if this is the only way to get on the housing ladder you have to go for it."

Affordability crisis

However, the Royal Institute of Chartered Surveyors said the scheme was having little impact on first-time house sales.

"The scheme is so small that it will account for less than half of one percent of transactions per year, benefiting only 20, 000 buyers over five years," said a RICS spokesman.

"The decline in government sponsored housing over the last twenty years is the single most important factor in the affordability crisis for those most in need.

"Only 21,000 publicly sponsored homes were built last year, compared to 110,000 in 1980."

The government said that property developers like Barratt, Lovell, Bellway and Redrow were developing their own shared equity products or discounts for first-time buyers.

It wants to hold talks with developers to explore new ways of providing more affordable housing.

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