The housebuilding industry has welcomed the prime minister’s announcement of a new equity loan scheme for first time buyers.

Andy Burnham over the weekend announced Your First Home, which is expected to support 2.5% deposits, backed by 20% government-backed equity loans for prospective buyers purchasing a new build property from a developer signed up to the scheme.

Buyers will be able to access the equity loans with an initial interest free period, which government said would allow buyers to save hundreds of pounds per month compared to a 95% mortgage. Developers will be expected to make a contribution when signing up to the scheme to help cover costs.