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MI New Home gets off to a successful start


Published: 19 September 2012 | Author: Bernard Clarke

We worked closely with lenders, the Scottish government and the building industry body Homes for Scotland in the build-up to the launch of the MI New Home scheme, details of which were announced last week. The scheme replicates the NewBuy initiative, which we helped to launch in England during the spring. 

From the outset, Nationwide Building Society and the Royal Bank of Scotland are offering mortgages under the scheme, with the Bank of Scotland/Halifax pledging to support the initiative shortly. Twelve builders are also participating in MI New Home. As in England, the Scottish scheme incorporates a guarantee from the government, which will help lenders advance mortgages at 90% – 95% loan-to-value. The initiative works in broadly the same way as NewBuy, although in Scotland the maximum value of homes covered by the scheme is capped at £250,000. 

Like NewBuy, MI New Home offers a means by which home-owners in Scotland can enter the market or move house with a lower deposit than they would otherwise require. As we said at last week’s launch of the scheme, it increases the options for households that may be constrained by the size of a deposit, and offers lenders additional assurances by offsetting some of the risks they would otherwise face.

  • Among the lenders backing the scheme, Nationwide’s head of mortgage strategy and policy Andrew Baddeley-Chappell said that MI New Home "offers a step on the housing ladder and helps provide much-needed housing."
  • The Royal Bank of Scotland’s mortgages director, Moray McDonald, said the lender wanted to help households which "could sensibly and sustainably afford a mortgage on a new-build property, but are currently locked out due to high deposit requirements."
  • Bank of Scotland/Halifax said it was "fully supportive" of the initiative and would provide over the coming months "a range of products specially designed for the scheme."

As in England, the Scottish government sees the scheme as a means of bolstering the role of construction as an engine for economic growth. At the launch, Scotland’s deputy first minister and cabinet secretary for infrastructure, investment and cities, Nicola Sturgeon, said the government wanted "to do everything that we can within our powers and our resources to get our economy growing, to create jobs and homes."

Our data show that 44,000 loans were advanced for house purchase in Scotland last year – down by 60% from a total 105,000 in 2006. House-building in Scotland is at its lowest since the second world war, but the scheme has the potential to support up to 6,000 households, which should help boost demand in the construction sector. The Scottish government estimates that the initiative has the potential to create or safeguard 22,800 construction jobs and over 650 apprenticeships. 

We support the aspiration of Scottish government to help people to get on to and move up the housing ladder, where it is possible and sustainable for them to do so.