LONDON: Britain on Tuesday launched the latest phase of its initiative to boost the property market, despite fears that it could help spark a housing bubble.
The coalition government said in a statement that its 'Help to Buy' scheme has been extended to offer mortgage guarantees for existing as well as newly-built homes that cost up to £600,000 ($966,000, 712,000 euros) for a set time period.
Thanks to the programme, buyers only need to find 5.0-percent deposits but they will not be allowed to take part if the intention is to own more than one property.
State-rescued lenders Royal Bank of Scotland and Lloyds Banking Group will start offering the new 'Help To Buy' mortgages this week, and will be joined next week by newcomers Virgin Money and Aldermore.
Global banking giant HSBC also revealed on Tuesday that it would join the scheme.
The first phase of the 'Help to Buy' programme was rolled out earlier this year, but was aimed at offering temporary interest-free loans to help borrowers purchasing newly-built properties.
Britain's house market is showing strong signs of recovery largely on the back of surging prices in and around London, fuelling fears of a new property bubble, according to analysts.
But the government argues that its scheme is needed because many people in London cannot afford to join the property ladder owing for a need to find deposits of more than ten percent.
Additionally, the housing market outside the capital is largely struggling to recover from heavy falls in the wake of the 2008 global financial crisis.