We reported earlier this week on how buyers are beginning to return to the housing market and in particular first time buyers, many of whom are now taking advantage of much lower house prices and managing to build up larger deposits in order to reduce the amount of loan to value they require on their homeowner loan.

As part of the government’s initiative to provide a boost to the housing and loan markets and help first time buyers enter the market, the Chancellor, Alistair Darling, announced in April that more money would be made available in the form of new loans to first time buyers, but so far the funds are not forthcoming and many potential buyers are still waiting for the government loan they applied for.

Mr Darling announced that there would be an extra £80 million made available to support the Shared Equity Scheme Homebuy Direct. This scheme is designed to offer loans of up to 30 per cent of the purchase price to first time buyers on an interest free basis for the first five years of the loan, in an attempt to encourage this sector back into the market. However, whilst the government say that they are still committed to the scheme, there appears to be a problem in managing to get the necessary loan funding to the people who actually need the money.

The funding from the government will be distributed via housing associations, but so far there appears to be a blockage somewhere in the system, as thousands of first time buyers who have applied for these loans are unable to complete their purchases due to waiting for the additional funding. According to figures from the Chancellor, it was anticipated that between 12,000 and 18,000 individuals would apply for the loan scheme, however there have been around 32,000 applications since the scheme was launched, just going to show that the government have severely underestimated the situation once again.