In a statement AMI said the announcement might well be the “steroid drug infusion package” that many have been calling for.
The Association were keen to point out that by using government guarantees to underpin higher loan to value lending it will assist lenders to offer more of this type of product without it impacting on their capital and liquidity positions.
Robert Sinclair, chief executive of AMI, said: "The new higher loan to value guarantees combined with the proposal to introduce government interest-free loans for more than first-time buyers must give encouragement to house-builders and to those looking to move up the housing ladder.
“This product which looks like an 'imitation' of the Castle Trust product shows a government that has been listening to the market but may have cut the ground from under that commercial product.
“The £600k house value limit is higher than we would have expected as it may have been limited to the £500k Stamp Duty limit.”
Sinclair said that if the initiatives are effective any costs incurred by the government would be more than offset by the tax taken from Stamp Duty.
Sinclair said: “The lack of any tidying of this tax remains as a key priority for the market but clearly is still needed to fund initiatives such as these.”
