Set up jointly with the Council of Mortgage Lenders, the scheme will see mortgages on new build homes underwritten by house builders and the government.
By taking away the risk of default losses from lenders, the scheme allows lenders to offer 95% loan to value mortgage on new homes.
Steven Rance, partner at JLT, said: “This scheme, created in response to the reduced availability of mortgage funding for homebuyers with small deposits, will reduce lender risk at higher LTV ratios and allow lenders to offer 95% LTV mortgages for new home buyers at more competitive rates.
“The UK's major lenders and house builders are all supporting the scheme which is being backed by the government and is expected to launch in March.”
Before the launch JLT will be developing the legal framework, scheme structure, bank accounts and systems with this initial scheme expected to run for three years.
Stewart Baseley, executive chairman of the Home Builders Federation said: “The lack of high LTV mortgages has been a major constraint on new home sales for the last four years. The indemnity scheme should provide a significant boost to new home sales over the next three years.
“Everyone involved in the scheme is now working very hard to ensure customers and home builders gain maximum benefit.”
