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Bovis Homes guarantees mortgages for buyers

In a sign of how difficult the UK property market is at the moment it has been revealed that Bovis Homes has tied up with Barclays and its Woolwich subsidiary to offer guaranteed mortgages to its customers. While the 90% mortgages will be dispatched by Barclays it is Bovis Homes which will take on the financial risk after agreeing to ring fence some of the company's profit from house sales to cover any potential repossession costs and mortgage losses in the future.

While this is a perfect scenario for property buyers in the UK who are struggling to agree mortgages there is no doubt it does reflect how difficult the UK property market is at the moment. If housebuilders, such as Bovis Homes, need to take on additional risk this will impact upon their profit margins and their financial security going forward. However, if this turns out to be the bottom of the UK property market then ultimately there will be very little risk to the company and it could turn out to be a very shrewd move.

Either way it is likely we will see more co-operation between mortgage lenders and housebuilders in the future for the benefit of all parties.

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