UK housebuilder shares surged on Monday after the government announced plans for a new equity-loan scheme aimed at helping first-time buyers purchase newly built homes. The market reaction pushed the housebuilding sector sharply higher as investors assessed the potential impact on demand for new homes.

The scheme, called Your First Home, is due to be confirmed at next month’s Budget. The government says the programme will operate in England and is designed to reduce the deposit barrier facing eligible first-time buyers.

Under the proposed programme, eligible buyers are expected to be able to purchase a new-build property with a 2.5% deposit, supported by a government-backed equity loan of up to 20% of the property value. Further details, including income and local property-price limits, are expected at the Budget.

The announcement had an immediate effect on financial markets. Reuters reported that the UK homebuilder index jumped around 16%, while shares in major builders including Persimmon, Barratt Redrow, Taylor Wimpey and Vistry recorded substantial gains during Monday trading.

The move could also affect companies across the wider construction supply chain, including building-materials manufacturers and suppliers, as stronger demand for new homes could translate into additional construction activity.

The government says the initiative is intended to support homeownership and stimulate the new-build housing market. Full details of the scheme are expected to be announced alongside the October Budget.