The UK Treasury is planning to extend the mortgage guarantee scheme, an article in The Sunday Times has revealed.

The scheme has underwritten £4.4bn in low-deposit home loans since it was launched on 21 April 2021. 

The government launched the scheme to increase the availability of 95% loan-to-value (LTV) mortgages. 

With the scheme due to end on 31 December this year, The Sunday Times article says that there have been fears it could lead to low-deposit mortgage deals disappearing from the market. 

Details of the extension have not yet been disclosed. 

Last month, government data revealed that there had been 24,153 mortgage completions through the 95% mortgage guarantee scheme since its launch in April 2021 to the end of June this year.

The total number represented 2.5% of all residential mortgage completions in the UK from the beginning of April to the end of June 2022.

This is an increase compared to the period ending in March this year with 6,157 more completions under the scheme.

The corresponding value of these guarantees is £641m while the overall value of loans supported by the scheme is £4.4bn. These mortgages were used to finance properties worth £4.62bn in total.

It showed that 85% of mortgage completions through the 2021 mortgage guarantee scheme to date have been for purchases by first-time buyers.

The majority of mortgage completions through the scheme to date were on terraced houses, making up 35% of total completions. 

Some 24% of completions in the scheme were on flats or maisonettes, while completions for detached houses and bungalows are much lower, making up 7% and 3% of the total respectively.

Compared to total mortgage completions in each region, the scheme supported a higher proportion of mortgages in the South East, North West and Scotland while it has seen a lower proportion in London and Northern Ireland.

The mean value of a property purchased or remortgaged through the scheme was £191,378 compared to a national average house price of £295,903.

The Sunday Times article suggests that the government was weighing up whether to extend the scheme, but is was likely to continue. 

An announcement on the scheme’s future is expected early this week.