First time home buyers in Manchester are set to benefit from a mortgage support offer launched by the city council that will guarantee up to 20% of their mortgages from the new year.

Developed in partnership between Manchester City Council, Manchester Building Society (MBS) and the Cooperative Bank, the Manchester Mortgage Guarantee Scheme aims to inject much needed demand into the UK’s sluggish housing market.

Eligible persons must be first time buyers looking for a home inside the Manchester boundary worth up to £150,000. The buyer must also be able to afford a minimum first time buyer 5% deposit.

The city council will guarantee up to 20% of the mortgage for up to five years – allowing for the customary appraisals from the lenders – with an option to extend for a further two years if necessary.

Cllr Jim Battle, deputy leader of Manchester City Council, said: ‘This is a new offer for first time buyers to fulfil their dreams of owning their own home. The recession has meant that for many the dream of buying their own home has been dashed, unable to obtain mortgages, raise deposits and access the lowest lending rates.

‘This new scheme will give people a pathway to home ownership that hasn’t been available to them for some time, and we hope this offer will make buying a home a reality – adding stability to the housing market and make Manchester an even more attractive place to live.’

Both MBS and the Cooperative Bank plan to offer mortgages in conjunction with the scheme from next year. MBS will primarily aim their mortgages at the second hand market, while the Cooperative will offer loans on new homes as well.

Each lender will initially offer 100 mortgages under the scheme with a view to expanding their offer in the future.

David Cowie, chief executive of Manchester Building Society, said: ‘The scheme will (also) act as a catalyst to increase the number of housing transactions in Manchester, which will reinforce housing values on both new and existing properties. It will also help to boost broader economic activity by supporting those local businesses where turnover is linked to the housing market.’