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Wednesday, 5 December 2007

Shared ownership does not seem to appeal


We've recently created an online campaign for Scottish Widows Bank focusing on their keyworkers mortgage product and so I've been more than a little aware of other offers in this market.

The governments scheme of Open Market HomeBuy was launched just over 12 months ago with the government offering a 12.5 per cent interest free loan with one of four other lenders matching this and then the borrower agreeing a mortgage for the remaining 75%.

Now the test of the appeal of this offer is in the take up and a recent Observer article flags up than only 2,000 mortgages have been completed with a target of 20,000 in the first 5 years. The problem seems to be that the mortgages that go with the scheme are expensive.

This lack of take up seems to have encouraged the government to offer more incentives and they have increased the initial interest free loan to 17.5% enabling the buyer to go to the open market for the rest of the loan.

It will be interesting to see if the increased loan % will help people get over the concern they have on shared ownership.

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