signed up Britain's largest housebuilders and lenders for a new 500 million pound($812.7 million) loan scheme to help first-time buyers onto the property ladder, housing minister Grant Shapps said on Monday.
Companies such as Persimmon, Barratt Developments and Taylor Wimpey are among the 100 housebuilders who will sign contracts this summer, enabling them to offer homes for sale through the government's FirstBuy scheme.
Lenders backing the project include Lloyds Banking Group's Halifax, Nationwide and Barclays.
Finance Minister George Osborne said in his 2011 budget the shared-equity scheme would cost 250 million pounds and be funded from the proceeds of last year's UK bank levy.
The scheme will provide buyers with a loan of up to 20 percent of the purchase price, split between the Homes and Communities Agency and the housebuilder. The loan will be interest-free for five years and will enable a buyer with a 5 percent deposit to take out a 75 percent mortgage.
Banks have tightened up their lending criteria in the wake of the credit crunch, partly due to more stringent regulations that require them to hold more capital on their books.
Many first-time buyers are now required to stump up bigger cash deposits in order to secure a home loan, which has dented demand for mortgages and led to a sharp slowdown in Britain's housing market.
Mortgage approvals fell in April to just half their long-run average, before the financial crisis, of 90,000 per month.
A dearth of mortgage lenders is also holding back lending in the UK, prompting a new UK company, Castle Trust -- backed by private-equity firm JC Flowers -- to seek regulatory approval to offer mortgage products.
The FirstBuy scheme, which replaces the previous administration's HomeBuy direct, aims to help 10,000 families get on the housing ladder for the first time over the next two years.
($1 = 0.615 British Pounds)
(Reporting by Lorraine Turner; Editing by Jodie Ginsberg)
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