Stuart Heathcote and his wife never intended to buy a house this year. Then the UK government offered an incentive that changed their minds: a no-money-down mortgage.
It was the head start they needed to sign a contract for a euro 135,000 (Bt7.11 million) three-bedroom house near Birmingham, the country's second-biggest city. Stuart, who works for the National Health Service, and his wife plan to move in before the end of January.
Easy credit is back in the UK, and this time the government and home-builders are making the loans. Seeking to recover from the worst recession in a generation, Britain is helping as many as 10,000 buyers obtain 100-per-crnt financing through a euro 300 million plan called Home-Buy Direct, at a time when mortgages are scarce and, according to professional services firm Ernst & Young, home prices will "stagnate" for at least two more years.
"It's a catastrophe waiting to happen," KBC Peel Hunt's home-building analyst Robin Hardy said of the plan. "If the only way a certain bit of the market can work is to lend deposits to those people who can't afford a house, it's being done for the industry and not for the first-time buyers."
More than 32.000 potential home-buyers have sought information about the loans, a sign that borrowers are not scared off by a home-price drop accompanied by rising foreclosures and defaults on high percentage loans that outstrip home values. There are currently no plans to expand the plan.
Britain's home-builders have also embraced Home-Buy Direct to revive sales. Barratt Developments, Persimmon, Miller Group and Redrow are offering a combined 7,000 homes through the plan, according to the companies.
"Generally, it has been very good for the industry," said Numis Securities' housebuilding analyst Chris Millington in London.
"It remove one of the main problems in the market and helps the new buyer. It has been quite a decent success."
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