During the Budget, the government confirmed the creation of a Mortgage Guarantee Scheme, which is designed to encourage lenders to lend at 95% LTV.
Scaife believes this scheme is a better option to stamp duty, as he believes it is a long-term solution rather than a short-term fix.
He said: “Of course, no-one wants to see a sharp drop in housing transactions following the end of the stamp duty holiday; and this 95% mortgage guarantee will be a good way to keep the market steady and help those with small deposits.
“There is undoubtedly demand for low deposit lending, but there is currently little supply.”
Scaife believes that while the scheme is available to both first-time buyers and home movers, it is likely to be more attractive to those trying to get onto the housing ladder.
He said: “This new 95% scheme will open up opportunities for more first-time buyers giving them options to buy existing properties as well as new builds up to £600,000.
“This is a significant distinction from the revamped Help to Buy Equity Loan scheme, which limits buyers to new builds only.
“That scheme also now has regional caps on the price of the property meaning some people will not be able to buy in the area they want to live.”
Scaife goes on to say that this government intervention will open the market up to more people who may now be able to afford to buy a home.
In addition, Scaife noted that the scheme is not limited to those on lower incomes, he believes individuals on high incomes will utilise the scheme as well in order to purchase in expensive areas.
He added: “The downside of a 95% LTV mortgage is that the interest rate is generally higher than lower LTV products.
“Most borrowers take out fixed rates so they will be on a high interest rate for at least two years.
“But there are people across the country who aspire to own their home and this move by the government might well be the route for them to achieve that.
“So this initiative is very welcome.”
