The Chancellor George Osborne has given details about the government's Help to Buy mortgage guarantee scheme to lenders.
At a meeting at Number 11 he talked with lenders and builders about the details of how the scheme will work and how to get more first time buyers on the property ladder.
The mortgage guarantee scheme aims to support an increase in high loan-to-value mortgages for people who cannot afford large deposits.
But Jack Dromey MP, Labour's Shadow Housing Minister, said: "Any help for first time buyers struggling to get on the property ladder is to be welcomed. But there is now widespread criticism that this scheme will do little to bring the cost of housing within the reach of low and middle income earners. Unless the Government finally acts to build more affordable homes, then home ownership for millions of first time buyers will remain but a dream.
"If the £10bn infrastructure boost recommended by the IMF was spent on housing, we could build 400,000 affordable homes and support 600,000 jobs. That's the way to get people back to work, sort out the housing crisis and strengthen our economy for the long term."
Mark Clare, CEO of Barratt Housing said that the number of homes Barratt is building is already up more than 20% on two years ago due to the Help to Buy scheme. And Pete Redfern, Chief Executive of Taylor Wimpey said: "I believe that the second phase of Help to Buy will benefit the whole market, particularly existing homeowners who want to move up the housing ladder but have been unable to do so."
In addition to the criteria set out at the Budget, the rules set out on July 23 2013 aim to ensure the scheme helps a large number of people onto the property ladder while ensuring responsible lending.
Anybody wishing to borrow money will be subject to income verification and stress testing, as set out in the Financial Conduct Authority's (FCA) Mortgage Market Review. Borrowers won't be able to access guaranteed mortgages if their credit history doesn't meet FCA ‘impaired credit' standards, including having a County Court Judgment over £500 in the past three years.
Nor will people be able to use the mortgage guarantee scheme to buy second homes.
CML director general Paul Smee commented: "The mortgage market is open for business, and it is clear that government support has helped to create more favourable market conditions for home-buyers. Lenders, whether they choose to participate in the guarantee scheme or stay outside, will continue to do their utmost to meet households' needs for mortgages, but always in a way that is responsible."
Stephen Noakes, Mortgage Director at Lloyds Banking Group, said: "The Help to Buy programme is making good progress, which is very encouraging for those who are looking to buy a home, but are struggling to raise the necessary deposit. The indemnity scheme will really increase the number of options for first time buyers or home movers who need a mortgage at a higher loan to value level.
"The launch of the scheme is an important development and will give a significant boost to the housing market by addressing the issue of accessibility."