Speculation has been mounting that the government may introduce a mortgage guarantee scheme to help first-time buyers get on to the property ladder.
Sunday newspapers reported that the Chancellor, Rishi Sunak, will unveil a scheme in the Budget on Wednesday.
The news has been welcomed by the industry.
Mark Hayward, chief policy adviser, Propertymark, said: “A government backed mortgage guarantee scheme will help first time buyers get on the housing ladder at a time when for many owning a home seems an impossible dream. Alongside the potential extension of the stamp duty holiday that we have been calling for, this new scheme will go some way in giving some hope to first time buyers at a time when the size of deposits required means they fall at the first hurdle.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “Turning ‘generation rent’ into ‘generation buy’ has been a focus for Boris Johnson for a while so the return of 95% loan-to-value mortgages for first-time buyers doesn’t come as a complete surprise. This, coupled with the extension of the stamp duty holiday, will result in a Budget which is a real boost for buyers.
“It is positive news for first-time buyers, particularly as it is not restricted to new homes, although critics may argue that it will only aid house price inflation. But without such a scheme would developers be so keen to put spades in the ground? The supply of new housing is nowhere near where it needs to be to satisfy demand.
“For those with little in the way of deposit, finding a 95% LTV mortgage has been pretty much impossible in recent months. The odd building society here and there has offered them, with Saffron building society launching at 95% in June but it only lasted a matter of days. Furness BS also has a selection of 95% products but these are restricted to certain postcodes.
“The only other current option to obtain a mortgage at this level is to call upon a third party, typically a parent, to provide extra security in the way of deposits or equity within the ‘guarantor’ property. Not everyone is in a fortunate position to do so.
“The last time there was a mortgage guarantee treasury scheme was via Help to Buy. The mortgage guarantee offering closed to new loans on 31st December 2016 (the equity loan continues, albeit in a revised form today) but by then, many of the high-street names had removed themselves from the scheme and ‘self-insuring’ their 95% offerings.”
