It's a monumental day for anyone involved in mortgage lending in England.
During the delivery of his 2013 budget to Parliament, the Chancellor of the Exchequer George Osborne revealed a sweeping mortgage stimulus package that is modeled after the Federal Housing Administration guarantee.
It's a major vote of confidence for the American model of housing finance, to see a notoriously difficult mortgage market, such as in England, help loosen credit at a Federal level in a similar way.
In short, Osborne declared that the new program, Help to Buy, will offer something never seen before in the history of the United Kingdom.
The government will guarantee mortgages with deposits close to 5%. Previously, any average Brit would expect to provide at least 20% down to get a mortgage. And even then, lenders were reluctant.
"We’re going to help families who want a mortgage for any home they’re buying, old or new, but who cannot begin to afford the kind of deposits being demanded today," Osborne told Parliament a few hours ago.
"Using the government’s balance sheet to back these higher loan to value mortgages will dramatically increase their availability," he added. The program will support mortgages up to the equivalent total of $200 billion, until 2017.
But Osborne didn't stop there.
Her Majesty's Treasury, using funds from the Bank of England, will also provide shared-equity loans.
So for those who put down 5%, the government will offer another 20% in credit. This loan is interest free for five years and gets paid back when the property is sold.
The government is setting aside around $5 billion for this part of the program.
"This Budget makes a new offer to the aspiration nation," Osborne said. "And what symbolizes that more than the desire to own your own home?"
The Chancellor also praised the Federal Reserve for its quantitative easing actions and suggested similar action in the UK to ensure home affordability.
"That is what the US Federal Reserve has now done – making a commitment to keep interest rates low while unemployment is high, provided inflation is not expected to rise too much," Osborne said. "This can help the economy because it gives families planning their futures, and businesses wondering whether to invest, more confidence that interest rates will stay lower for longer."
Read Osbourne's statement here.