A new mortgage guarantee scheme, backed by the government, will help buyers with 5% deposits get a foot on the housing ladder, with loans available next month. The scheme was announced by the chancellor Rishi Sunak in his 3 March budget.
The chancellor hailed the scheme as, “a policy that gives people who can’t afford a big deposit the chance to buy their own home.” Adding that, “as the prime minister has said, we want to turn generation rent into generation buy.”
Low-deposit mortgages disappeared from the market during the coronavirus crisis with mortgage lenders demanding at least a 10% deposit.
According to the chancellor, several high street lenders have come on board the scheme. He named Lloyds, NatWest, Santander, Barclays and HSBC, saying that others, including Virgin Money, are also expected to join.
Within half an hour of the announcement, property portal Rightmove said use of its mortgage calculator jumped by 85%, with overall traffic to its website up by 16%.
The 95% mortgages will be available to all buyers of properties costing up to £600,000, who will also be able to fix their mortgage rate for five years. While aimed at helping people onto the housing ladder, it will not be restricted to first-time buyers - unlike the government’s Help to Buy scheme. The mortgages will be on offer from April until December 2022.
The budget also brought the announcement that the stamp duty holiday, introduced in the summer to boost the housing market and wider economy, will be extended until the end of June with a £250,000 threshold before buyers begin paying the tax in place from then until 1 October.
Read more about the scheme in the Evening Standard