Mortgage guarantees: Wales scheme begins in spring 2013

Details of a Welsh government-backed mortgage guarantee scheme to help first-time buyers and those wanting a bigger home have been unveiled.

The three-and-a-half year scheme will be rolled out from next spring.

It will be available to all buyers in areas of "housing pressure" and to all first-time buyers on up to 3,000 new homes up to the value of £250,000.

The scheme was put forward by the Liberal Democrats during budget negotiations last year.

"It will give much needed assistance to potential house buyers who need help with their upfront deposit," said Peter Black, the Lib Dem housing spokesman.

"At the same time it will stimulate the economy and boost jobs in our construction sector," he added.

Housing Regeneration and Heritage Minister Huw Lewis called it an innovative scheme which will help buyers, the housing industry and the wider community.

"Not only will it help people whose plans to buy their first home or for moving to a bigger home have stalled due to lending restrictions from banks, but it will also provide house builders with potential new customers," he said.

"It will therefore boost house building which will in turn create jobs and stimulate growth."

Rather than funding being made directly to buyers, the Welsh government and house builders will act as guarantors, with the Welsh government supporting it to the tune of £27m.

The intention is that buyers can access larger mortgages than would otherwise be available to them.

Buyers will contribute a 5% deposit.

Finance Minister Jane Hutt said the scheme was part of a plan for growth and jobs announced in May.

At the time opponents claimed there was very little new on offer and that it was just a repackaging of old announcements.

But Ms Hutt said it was delivering on commitments, with a "potential investment in housing of up to £500m within a three-year period".

"We will now be working with the Council of Mortgage Lenders and Home Builders Federation to ensure the scheme is up and running by spring 2013," she added.

Richard Price, of the Home Builders Federation in Wales, said it was a "welcome boost for house buyers".

He added: "One of the biggest struggles that people have had in Wales is getting access to mortgage finance and the main issue with that is with respect to the large deposits that have been required by banks and building societies."

He said it "will not be a facility for people to somehow buy homes they can't afford," adding: "A key element of the scheme, as with any mortgage, will be to ensure that the prospective purchaser can afford it."