Investing.com -- Shares in British housebuilders surged on Monday after the government said it would launch a state-backed equity loan scheme to help first-time buyers into new-build homes with deposits of just 2.5%.
The Ministry of Housing, Communities and Local Government said that the scheme, called 'Your First Home,' will be confirmed at next month's Budget and will operate in England.
The scheme is expected to support 2.5% deposits, backed by 20% government-backed equity loans, for prospective first-time buyers purchasing a new-build property from a developer signed up to it.
Shares of Berkeley Group Holdings, Persimmon, Barratt Redrow, Taylor Wimpey, Bellway, Vistry Group and Crest Nicholson Holdings plc rose between 3% and 14.5%.
Buyers will be able to access the equity loans with an initial interest-free period, which the government said means those who use the scheme could save hundreds of pounds per month compared with a 95% mortgage.
The government said the scheme will help tackle the deposit barrier for first-time buyers who would otherwise be unable to afford their first home, building on its existing work to help more young people and families onto the housing ladder.
It will also set a household income cap with local property price caps to target support at those who need it. The details will be set out at the Budget.
The government said the new-build housing market is facing "challenging headwinds" driven by international economic pressures and rising construction costs. It said the scheme will act as a stimulus to support the market and boost housing supply.
Developers will be expected to make a contribution when signing up to the scheme to help cover costs.
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