The government has confirmed that it will cover the risk of 95 per cent mortgages through a guarantee for lenders.
The scheme, announced during today’s Budget, will give buyers – both first-time and existing – the option to put down a 5 per cent deposit on a home with a value of up to £600,000, tackling the problem of higher-LTV mortgages disappearing from the market.
Described as a “New policy to stand behind home buyers,’ chancellor Rishi Sunak stated that some of the country’s biggest lenders, “Including Lloyds, NatWest, Santander, Barclays, and HSBC” will be offering the new mortgages from next month.
“More, including Virgin Money, will follow shortly,” he said, adding “As the prime minster has said, we want to turn ‘generation rent’ into ‘generation buy’”.
Glenhawk chief executive Guy Harrington says: “The government should be applauded for helping not just first time buyers, but current homeowners, and for including older stock in the eligibility criteria.
“For many Brits their home is their castle and for too long, too many have been priced out the market; the more that can experience that feeling of putting the key in the lock for the first time the better.
“FTBs in particular, for whom this measure will be a game changer, are the roots of the market and nurturing them will only benefit the rest of the housing tree.”
Stonebridge Group chief executive Rob Clifford adds: “Undoubtedly, anything that helps boost the number of low-deposit mortgages in the market is going to be helpful and is welcome, because lenders have understandably retreated from this space over the last 12 months.
“The Help to Buy version did boost availability of high LTV mortgages and we would anticipate this will do the same, given that it should generate more competition and deliver more consumer choice; it may also increase products from those lenders who don’t participate in the formal scheme but decide to utilise private mortgage insurance to facilitate these loans.
“Supply of affordable homes to the market remains key – without greater supply at the right price, even with the return of 95 per cent mortgages, many would-be FTBs will still find home ownership elusive. The most significant obstacles for FTBs remain both the deposit and headline purchase price itself.”
However, Audley Group chief executive Nick Sanderson comments: “This Budget focuses on targeted measures at the wrong end of the market – 95 per cent mortgages will primarily benefit FTBs.
“There is no support for those downsizing or moving into housing with care. Supporting this end of the market would have a significant impact on the whole housing market, but has been largely neglected. This is a missed opportunity.”
