The proposed mortgage indemnity scheme has been welcomed by prospective home owners struggling to get a foot on the property ladder, as it means they will only have to find a 5% deposit. It is hoped that the scheme will help 100,000 people that have been unable to secure a mortgage due to banks refusal to lend at high loan-to-value ratios.

Led by the Home Builders Federation and the Council of Mortgage Lenders, it is hoped that by house builders or the government underwriting part of the loan, lenders will be given the incentive to relax their lending criteria on new properties.

In addition to the mortgage indemnity scheme it was also announced that the government proposes to inject £400m in funding for developers to build up to 16,000 homes. Developers will compete for funds from the government and it is expected that work could start on these as early as next July.

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