LAMS is a project that involves indemnifying 20% of first-time buyers’ mortgage loans. Together with the homebuyer’s 5% deposit it means that first-time buyers can access the lower interest rates that come with needing only a 75% mortgage.
The scheme, if eventually adopted, will not involve the council actually paying the 20% of the purchase cost. Rather, the bank or building society will loan the 95% – but regard it as a lower-interest 75% loan on the basis that the money is not at risk. A pilot project in 10 other council areas showed that the mortgage default rate was 0.3%.
Councillor Trevor Fiddler, Fylde Council cabinet member for Planning and Development, said: “There is broad support for this but we need to know more.
“The housing market is very slow because there is a shortage of first-time buyers. Interest rates are quite low but it is common for first-time buyers to find 25% of the cost themselves.
“That is beyond many people. It has a knock-on effect because people further up the ladder can’t find buyers for their homes so they can’t move either.
“Young people in Fylde, of course, have a particular problem in that many houses here are very expensive. At the moment the only affordable housing we can offer them is in the social rented sector – this scheme may offer them a foothold on the housing ladder.
“We still need more information but it is a scheme that we are interested in as first-time buyers hold the key to getting the housing market moving again. Too many young people are trapped into renting and too many people are trapped in houses they really want to sell.”
