News article 17/09/2012

(Issued 15 September 2012) 

The importance of a new scheme which aims to help overcome the barrier to home ownership caused by large deposit requirements was recently reinforced by research from Bank of Scotland highlighting that over half the respondents of its housing confidence survey consider this a major hurdle with an average deposit of more than £28,000 (25%) required in June this year.

It is this exact problem that the MI New Home mortgage indemnity scheme, which was launched last week (Wednesday 12 September), has been developed to address, enabling buyers to purchase a new build home with as little as a 5% deposit. Based on the Bank of Scotland example, this equates to a much more achievable deposit figure of £5,670 – a massive difference of more than £22,000.

Supported by the Scottish Government, the scheme was developed by industry body Homes for Scotland. The organisation’s Chief Executive Philip Hogg said:

“This research from Bank of Scotland contains many positive statistics such as the news that the cost of buying a home in Scotland is over 7% lower than renting and that the average home buying costs have fallen by 45% since 2008.

“The frustrating fact, however, is that many credit-worthy buyers have effectively been locked out of the market by large deposit requirements. This is borne out in the feedback of customers who all too often say that mortgage affordability is not a problem to them but they simply cannot gather such large deposits together.

“The MI New Home scheme now provides an important option for them and could assist some 6,000 households achieve their home ownership aspirations over the next three years, helping to relieve pressures elsewhere in the housing system and providing significant wider benefits in terms of jobs and the economy.”