In an interview with the Telegraph the prime minister said he thought many people felt excluded from the idea of homeownership and he wanted to ‘fix’ this by creating a society supporting ‘Generation Buy’ as opposed to ‘Generation Rent’.

He said ministers had ‘worked up plans’ to encourage long-term fixed-rate 95% loan-to-value mortgages. This was likely to involve removing the stress tests put in place following the financial crisis.

The government could potentially accept some of this risk through a form of state guarantee to ease the pressure on lenders, the article suggested.

Manifesto pledge

The idea of a long-term mortgage to encourage homeownership was first raised in the Conservative’s election manifesto in November last year.

It said, if elected, the party would introduce long-term mortgages for first-time buyers who would need deposits of just 5%.

At the time, critics said there was very little detail in the plans, with Mark Harris of mortgage broker SPF Private Clients raising concerns a long-term product of this kind did not take into account life events and changes in requirements and was therefore ‘unrealistic’ and ‘unworkable’.

Supporters of the idea, however, said it offered protection from future interest rate rises and, provided the early repayment charges (ERCs) were low, could work to support more renters gain a chance at homeownership.

In December the think tank, the Centre for Policy Studies (CPS), endorsed these mortgages as a credible solution to the UK’s homeowership crisis.

In its report, ‘Resentful Renters: How Britain’s housing market went wrong and what we can do to fix it’, the CPS examined the root causes of Britain’s housing problems.

The conclusion reached by report author, Graham Edwards, a former property firm CEO, was the introduction of long-term fixed rate mortgages provided an ‘easy solution’.

Responding to Boris Johnson’s more recent update on these 95% mortgages, Nisha Vaidya, Mortgage Expert at Bankrate UK, said government efforts to support first-time buyers were welcome.

“Any plans to reform the mortgage market need to be combined with a renewed focus on increasing the supply of affordable housing that young people can access,” Vaidya added.