News article 12/09/2012

(Issued 12 September 2012) 

MI New Home, the mortgage indemnity scheme which enables participating lenders to offer up to 95% mortgages on homes sold through participating builders up to £250,000, was this morning launched in Edinburgh by Deputy First Minister Nicola Sturgeon.

Supported by the Scottish Government, MI New Home has been developed by the home building industry in response to the large deposit requirements which have effectively locked many people wishing to move onto and up the housing ladder out of the market.

Supporting lenders at launch are the Royal Bank of Scotland and Nationwide. Halifax/Bank of Scotland will offer mortgages through the scheme in the near future. Twelve house builders have signed up for the scheme and more are expected to follow shortly.

The Scottish Government will support the scheme by providing a guarantee.

Homes for Scotland is projecting that the scheme has the potential to generate sales of up to £1 billion over three years, and could also create or safeguard 22,800 new construction jobs and over 650 apprenticeships.

According to the Council of Mortgage Lenders, there were 44,000 loans advanced for all home purchases in Scotland in 2011 compared to 105,000 in 2006 – a fall of 60%.

Homes for Scotland Chief Executive Philip Hogg said:

“With housing output at its lowest level since the Second World War, the main obstacle to recovery in our sector remains constraints on mortgage lending, particularly in relation to high deposits.

“The scale of the problem is highlighted by the fact that Scottish home buyers are having to find an average 25%. This equates to nearly £40,000 based on an average Registers of Scotland 2011/12 home price of £156,410 – completely unachievable for most people.

“We need new and creative ways of thinking in order to get the market moving again and more homes built. Only through the implementation of innovative measures like MI New Home can we ensure Scots have access to a full range of housing options.”

Click here to access the full Scottish Government press release.