The development of a product to help first-time buyers is said to be making good progress, with talks ongoing between local authorities in the Greater Manchester area and two lenders.
Under the Manchester Mortgage scheme each council within the Greater Manchester area is able to specify its own criteria for those who should qualify for a mortgage.
If an applicant meets the lenders’ criteria, the council will underwrite up to 20% of the mortgage. The process allows the buyer to obtain a 95% mortgage on similar terms to a 75% mortgage. The councils would offer guarantees for five years, which could be extended to seven.
Early discussions with the Co-operative Bank and the Manchester Building Society are described as having been fruitful, and both lenders are interested in developing the concept further.
Sir Richard Leese, leader of Manchester City Council, said: “It is about how we address the issue of first-time buyers who can’t afford a deposit. We are finding a way of the council underpinning a first-time buyer mortgage.
“Without being imprudent, there is no risk to council tax payers. We will work at providing affordable properties.”
Both Liverpool and Oldham have launched similar mortgage schemes this year. In Liverpool, the council has approved a £3m plan for a local authority mortgage scheme to help 200 first-time buyers. The council will underwrite top-ups of up to 20% so buyers can obtain a 95% mortgage. The indemnity would only be called upon if a loss is made by the mortgage lender.
In Kent, the county council is considering a £24m scheme which would help 800 first-time buyers to get on the property ladder.
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