Budget 2013: the CML responds
Following the Chancellor’s announcement of the new “Help to Buy” package, the CML said it will work constructively with Government to help deliver a workable scheme but it emphasised that the detail of the operation will be crucial to its success.
The CML said: “Clearly to be successful the voluntary scheme will need to be robust, not overly complex, resulting in the delivery of products that are attractive to borrowers and commercially viable for lenders.
“To achieve this the scheme will need to ensure that all lenders will be able to gain capital relief in recognition of the risk mitigation offered by the government guarantee.
“Without capital relief, and depending on the size of the fee, the cost of the commercial fee that lenders will have to pay to gain the benefit of the scheme could make the scheme uneconomical.”
The CML pointed out that as it will take some months to design the scheme the benefits will not be immediate.
However it added: “A successful scheme could ultimately enable lenders to offer more low-deposit loans than they would otherwise be able to do without incurring concerns from funding markets, prudential regulators or their own internal risk committees.”
The CML also urged the government and building industry to continue to support NewBuy as well as the increased focus on the reinvigorated equity loan scheme that replaces FirstBuy.
The CML said it had commissioned consumer research to explore current attitudes to low-deposit mortgages and mortgage market issues more generally.
The findings will be available in the next few weeks and will be used to calibrate the likely consumer appetite for the proposals.