Housing Corporation News Release

More choice for Open Market HomeBuy mortgages

21 March 2007 Ref: 33/07

A new competition to increase the number of lenders who will provide shared equity mortgages and help more people on low incomes onto the housing ladder was announced by the Chancellor in the Budget today (Wednesday 21 March).

The competition aims to provide a wider choice of shared equity mortgages for homebuyers through the Open Market HomeBuy scheme. The scheme currently provides equity loans, funded by the government and mortgage lenders, which boost the purchasing power of the homebuyer.

The Housing Corporation today published an early invitation to mortgage lenders, investors and housing associations to participate so they can prepare competitive products, consult with the government and give feedback for the development of the competition.

The invitation makes clear the Housing Corporation would welcome the development of an affordable and sustainable equity loan for households who are only able to purchase around a 50-70% share.

Housing Minister, Yvette Cooper, said,

“Rising house prices can put real pressure on first time buyers. That is why it is so important to provide extra help for people to get on the housing ladder through shared equity mortgages.
 
“By inviting more mortgage lenders and others to join Open Market HomeBuy, homebuyers will get even more financial choices from a greater range of providers when looking for a home to call their own.”

By providing affordable housing products in partnership with mortgage lenders the government is able to help even more people who, without the scheme, would not be able to buy a home they can afford. The new competition will help the Housing Corporation assist even more households into home ownership, and bringing closer the target of helping 160,000 households to become home owners between 2005 and 2010.

The competition will aim to be attractive to a wide range of organisations, including mortgage lenders, institutional investors and housing associations.  It offers an opportunity for the market to engage with the Housing Corporation to create innovative and viable financial products to deliver affordable home ownership.  CB Richard Ellis, the real estate advisor, has been selected by the Housing Corporation to market, launch and evaluate this competition.

Housing Corporation Chief Executive, Jon Rouse, said,

“Over 85% of households aspire to be home owners, but affordability stops some groups in society - particularly those on low incomes -  from achieving their aspirations.  The Shared Equity Task Force report sets a challenge for the Corporation to build further on the partnerships we already have with the private sector.

“The competition which the Chancellor has announced today will enable us find  a wide range of institutional, lender and housing partners to fund innovative and effective solutions to help more people into affordable home ownership.”

Ends.

Notes to Editors
1) For further press information, please contact Katy Nicholson on 020 7393 2118.

2) Subject to the spending review timetable, the competition will launch in Summer 2007.  In the meantime, interested parties can contact Gill Rowley, Head of Private Finance at the Housing Corporation, on shared.equity@housingcorp.gsx.gov.uk.
The Housing Corporation will run the full competition in the summer.

3) Four lenders already have products on the market and the Housing Corporation wishes to continue to work closely with them on the Open Market HomeBuy brand to ensure that it is responsive to market changes.  With mortgage lenders increasingly looking at ways to provide affordable housing options it is a key time to launch the next competition for the Open Market HomeBuy.  The ‘advance notice’ will give potential new lenders time to devise products ahead of the competition launch and the Comprehensive Spending Review allocation.

4) The Housing Corporation is the Government agency responsible for investing in new affordable homes and regulating nearly 2,000 housing associations across England.  Its biggest ever investment programme of £3.9 billion for 2006-08 will fund 84,000 homes;  49,000 of these will be for affordable rent, and 35,000 will be for affordable sale through the Government's new HomeBuy initiative, helping people to get a foot on the property ladder.

5) The Housing Corporation is working with English Partnerships and Communities and Local Government to establish the proposed new national housing and regeneration agency, Communities England.