More UK housing support - "FirstBuy"

Telegraph reports

"Under FirstBuy, the Government and housebuilders will provide buyers with a loan of up to 20pc of the property price, meaning that potential buyers will have to put up just a 5pc deposit to qualify for a 75pc mortgage.

Some £500m will be made available over the next two years, split equally between the Government and housebuilders, to help about 10,000 people into home ownership.

Among the housebuilders to have signed up are Persimmon, Barratt Developments, Bovis Homes and The Miller Group. At the same time, a number of banks have agreed to offer 75pc FirstBuy mortgages, including Halifax, Nationwide and Barclays.

The equity loan will be interest-free for five years with interest charged at 1.75pc in year six, and at inflation plus 1pc thereafter. Loans will be repaid on resale of the property. The first homes are expected to come on stream in September this year"

Builders are already paying [link] some purchasers to take their houses. This is looking desparate!

House prices are too high, borrowers cannot (or will not) afford to raise a 25% or similar deposit at current prices.  The government's considered response is not to let house prices drop to affordable levels but instead to give buyers some more debt. 

These "initiatives" are not supporting UK housing, they are supporting UK house prices, and UK housebuilders. Doing the former prevents firsttime buyers purchasing a home, doing the latter is moral hazard. 

On the other hand the scheme is small - only 10,000 buyers could benefit from taxpayers money.  But of course the big residential builders will benefit massively.  They will be able to shift 10,000 newly-constructed homes off their books - if those houses would otherwise generate a loss then they make a profit instead of a loss, if those houses would generate a profit, then they make even more profit. Bingo. Where's my bailout?