The mortgage guarantees will allow buyers to acquire a newly built home or an existing property worth up to £600,000 with a deposit of only 5%.
The second stage of the Help to Buy scheme aims to boost mortgage availability by reducing the risk for lenders because the Government takes on the risk of default when it guarantees a proportion of a loan.
Mr Cameron believes that will help solve the skewed market that means people on good wages struggle to buy even modest properties because they cannot scrape together the massive deposits needed or find a mortgage.
The scheme was due to start in January next year but the Prime Minister will say at the Conservative Party conference today that people will be able to start applying for the new mortgage guarantee from next week.
Mr Cameron said: “Young people who’ve got a decent job and have got decent earnings - they cannot buy a house or a flat, because they have to have a £30,000, £40,000 or £50,000 deposit. Now, if you haven’t got rich parents, you can’t get that sort of money.
“So we’re going to launch the Help To Buy Scheme - it’s not coming in next year, it’s coming in next week, because I’m passionate about helping people who want to own their own flat or home.
“You take a nurse married to a teacher. They’re both earning £25,000 - that’s pretty close to average full time earnings. If they want to buy a £200,000 house, they’re going to have to find a £40,000 deposit.
“Now, they can’t do that, unless they’ve got rich parents. That’s not right. That’s not an aspiration nation.”
But the scheme has attracted widespread concern, with some claiming it may lead to more problems than it solves.
Liberal Democrat Business Secretary Vince Cable warned the scheme “could inflate the market” and said he feared there was a “danger of getting into another housing bubble”.
Former Bank of England governor Lord King said the scheme is “too close for comfort” to a general scheme to guarantee mortgages.
Labour’s shadow chancellor Ed Balls said: “If David Cameron is serious about helping first-time buyers he should be bringing forward investment to build more affordable homes. Rising demand for housing must be matched with rising supply, but under this government housebuilding is at its lowest level since the 1920s.
“Unless David Cameron acts now to build more affordable homes, as Labour has urged, then soaring prices risk making it even harder for first time buyers to get on the housing ladder.
“You can’t deal with the cost of living crisis without building more homes, so it’s no wonder that for millions of families this is no recovery at all.”
The first stage of Help To Buy was launched in April and offers loans to give people the chance to buy a new-build home with a deposit of just 5%. The scheme has been credited with spurring a surge in home sales and driving up prices
DOMVS: 30th Sep 2013 13:49:00