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UK launches program to help home buyers

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October 8, 2013 05:55 AM EST | AP


LONDON — LONDON (AP) — Britain's government is launching a 12 billion-pound ($19 billion) program to help first-time homebuyers, a landmark plan that tries to offset banks' reluctance to lend.

Under the plan, potential homebuyers will only need to put up 5 percent of the home's value, rather than the standard 20 percent that most banks are demanding. The government will guarantee the remaining 15 percent in the event of a default.

The government started this portion of the program Tuesday — earlier than planned — after the first phase, which offered government loans to help buyers of newly built homes make their down payments, proved very popular.

Critics suggest the program, called Help to Buy, will fuel a surge in the market, where prices are increasing even though the economy remains weak.