Council Unveils Plan for 'Manchester Mortgages' to Encourage House-Buying
8 Feb 2012
The Manchester property market may be set to get a boost, it emerged this week. Council bosses have announced plans to help first-time buyers with a so-called “Manchester mortgage,” using £25 million currently lying dormant in the Greater Manchester Pension Fund to build new affordable homes.
Manchester City Council has flagged five sites under its jurisdiction in Chorlton, Wythenshawe and Gorton, where it plans to build around 250 new homes for the Manchester property pool. The homes will be available for sale and rent. The plans represent a pilot scheme, with the pension fund paying for the cost of building the homes. If the scheme is a success, the council plans to widen it over the next decade.
The scheme also contains a mortgage-guarantee element, aimed at helping people in the city move on to the property ladder. The “Manchester mortgage” will underwrite up to a fifth of the home loan, thus making them more affordable – especially for first-time buyers. The mortgages will hopefully be administered by the Co-operative Bank and the Manchester Building Society – talks are currently taking place between representatives of the lenders and council officials.
Under the innovative mortgage scheme, borrowers would be able to take out a 95 per cent loan-to-value (LTV) mortgage at the same price as a standard 75 per cent LTV loan, thus minimising the need for hefty deposits.
The local authority’s executive member for neighbourhood services, Councillor Paul Andrews, told the Manchester Evening News that the plan had been conceived because housing stock has fallen to an all-time low in the Manchester property sector, mainly due to a lack of building projects – since 2007, house completions have plunged by over 75 per cent, he pointed out.
“In the current economic climate, the levels of development being brought forward and the availability of mortgage finance are not keeping pace with the city’s needs,” Cllr Andrews added.
“That’s why the council, working with Greater Manchester Pension Fund and the Homes and Communities Agency, is looking to bring forward an innovative new model for investing in new housing which will help address this issue.”