There have 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 latest government data reveals.
The total number represents 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.
The latest data shows that 85% of mortgage completions through the 2021 mortgage guarantee scheme to date has been for purchases by first-time buyers.
The majority of mortgage completions through the scheme to date are on terraced houses, making up 35% of total completions.
Some 24% of completions in the scheme are 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 has 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.
Quilter mortgage expert Karen Noye says: “First-time buyers have faced a difficult battle in recent years, from soaring house prices, inflation rapidly eating away at their deposits, and the current cost of living crisis putting a dampener on their ability to save – all in conjunction with growing mortgage rates that make monthly repayments increasingly unaffordable.”
“Given the struggle first-time buyers face, it is rather surprising that the number of mortgages completed with the help of the government’s mortgage guarantee scheme remains relatively low – with just 24,153 mortgages completed between April 2021 and June 2022.”
“While use of the scheme is relatively low, it is seeing a gradual uptick in popularity. In its first full year – April 2021 to March 2022 – a total of 17,996 mortgages were completed with the support of the scheme. In comparison, in just the first three months of its second year – April to June 2022 – a total of 6,157 were completed.”
“However, while the take up has been modest at best so far, this is partly as a result of lenders identifying the gap in the market prior to the government’s implementation of the scheme and therefore offering their own 95% mortgage products.”
“Given lenders are now tightening their offerings and many have reduced or removed the high loan to value mortgages they offer, we could see a further uptick in the use of the government scheme as more people are forced to rely on it.”
“The latest data shows 15% of all mortgages completed using the government scheme were not first-time buyers, showing the scheme is still proving relatively popular among other borrowers. This may illustrate that it is not just first-time buyers who are struggling with the current housing costs and other financial pressures, and this could increase as the cost-of-living crisis takes a firmer hold.”
“Interest rates have risen rapidly, and people’s finances are beginning to look less stable against the cost-of-living backdrop. As such, lenders may begin to take more advantage of the scheme which would compensate participating mortgage lenders for a portion of net losses suffered in the event of a repossession. The guarantee applies to 80% of the purchase value of the guaranteed property covering 95% of these net losses.”
