George Osbourne’s NewBuy scheme has been criticised as ineffective by UK housebuilders. The scheme is seen by many as an election ploy as the government seek to address the issue over the lack of affordable housing in the UK.
The NewBuy scheme aims to help first time buyers who are struggling to get onto the property ladder by offering mortgages to individuals with 5% deposits. Only a few retail banks have supported the scheme and are offering above average interest rates on NewBuy mortgages. People who cannot afford to raise housing deposits are unlikely to be able to afford the high interest rates charged on the NewBuy mortgages. The government will need to rethink their strategy and would be better served by addressing the issue of rising house prices in the UK.