95% Help To Buy Mortgage Scheme set to be announced

As part of his budget tomorrow, Chancellor Rishi Sunak is expected to announce a new scheme to help buyers get on the property ladder.

The launch of the 5% deposit Help to Buy mortgage scheme will be limited to properties worth up to £600,000 and is open to everyone who wants to own their own home as part of the Prime Minister’s ‘Generation Buy’ campaign as he echoes the sentiments of a previous female Conservative PM.

It is thought that lenders who utilise the scheme will offer fixed mortgages for a minimum of five years to buyers, with the financial institutions able to buy a government guarantee to compensate them for a portion of heir losses in the event a property is repossessed.

Chancellor Rishi Sunak said:

“Owning a home is a dream for millions across the UK and we want to help as many people as possible.

“Saving up for a big deposit can often be difficult, and the pandemic has meant there are fewer low deposit mortgages available.

“So by giving lenders the option of a government guarantee on 95 per cent mortgages, many more products will become available, helping people to achieve their dream and get on the housing ladder.”

Phil Bailey, Sales Director at mortgage technology provider Twenty7Tec, commented:

“Mortgage activity levels since the stamp duty announcement have remained consistently high. Pushing up house prices, creating more competition and higher demand in the first time buyer market. A potential 95% LTV mortgage scheme, backed by the government and sitting alongside help to buy would go a long way in providing lenders with the confidence they need to further support this area of lending. Right now, lenders continue to be cautious and although we have seen an increase in 90%+ products to market (more than doubling since June), affordability, criteria and increased difficulty in securing these higher-risk mortgages continue to be challenging for many, especially those stepping onto the property ladder for the first time. If the government wants to achieve its new homes target at any point, a scheme to support the buyers of these properties is required.”

Mark Hayward, Chief Policy Adviser, Propertymark commented:

“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.”

Naturally, the steps that the Chancellor is purporting to take won’t please everyone.

Thangam Debbonaire, Labour’s shadow housing secretary, says:

“Home ownership has fallen in the decade the Conservatives spent weakening the foundations of our economy.

“If the Chancellor wants to help young people get on, he should deliver a Budget with a relentless focus on jobs and growth.

“What young people need to get on is the secure future that comes with a decent job and genuinely affordable new houses to be built for them to make homes of, not going back to the days of sky high mortgages.”

Dan Wilson Craw, Deputy Director of the Generation Rent campaign group, took to social media to share his frustration. He tweeted:

“This is real ‘Let them eat cake’ stuff from the government – in a week when we learned that 715k private renters don’t get enough Universal Credit to cover the rent. Higher property values for existing homeowners. Still nothing for renters in debt to their landlord.”

Today's Conveyancer