Labour T.D., Ciaran Lynch has welcomed the proposal by NAMA today that they are to introduce a pilot mortgage scheme which will insulate first time buyers from the threat of negative equity by up to 20 per cent.

"For too long too much focus has been on the acquiring of property for speculation purposes, rather than for the building of a home. This announcement today however, sets to correct this as it will act as a normalising measure for the property market, focusing on home purchase over investment.

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"The scheme asks buyers to pay 80 per cent of the value of the house. Included in this 80 per cent is the buyers own deposit, which must equal at least 10 per cent. The outstanding 20 percent is then borrowed in a second loan 5 years down the line. If the value of the property falls over this five year period however, the buyer will get a discount on the 20 per cent still due, the exact amount depending on how much the value has fallen by.

"During this five year period home owners will repay the loan at the full amount, meaning that if the property does fall in value during the first five years, they will not only have to borrow a smaller amount for the second loan but they will have also accelerated the repayment of their loan.

"Many people are looking to buy a home but are worried about the consequences if the property they purchase falls in value. This scheme means there is a built in protection for those purchasing a new home and this will give many the confidence they need to buy."

(CD/GK)