The number of mortgage searches by first-time buyers surged by 71% this week following the launch of the government-backed 95% LTV scheme on Monday, according to Moneysupermarket.com.

Lenders have been returning to the market for borrowers with low deposits with help from the government’s mortgage guarantee scheme and it seems that buyers are already responding to the news by checking out what options are on offer.

There are now at least 70 deals for borrowers with a 5% deposit and the number is increasing every day with two new lenders launching products just this morning.

The figure is up from 12 at the start of the year, but well below the 214 that were available before the pandemic in January 2020, according to the price comparison site.

However, the comparison website’s research suggests that many buyers are likely to miss out on the extended stamp duty holiday.

Moneysupermarket says that the average property sale takes 77 days to complete with first-time buyers typically taking 99 days, however there are just 70 days to take advantage of the current stamp duty threshold.

Following the chancellor’s extension of the stamp duty holiday in March, the threshold above which buyers have to pay the tax is currently £500,000 until the end of June, after the nil rate band will drop to £250,000 until the end of September. 

From 1 October the usual level of £125,000 will return.

Moneysupermarket says that mortgage enquiries surged by 421% after the chancellor announced the scheme’s extension. 

Moneysupermarket finance expert Jo Thornhill says: “The stamp duty holiday extension has been hugely popular but those seeking to take advantage of it better hurry with the deadline now only ten weeks away. “With the average home purchase taking 77 days to complete, many will be cutting it fine. 

“However, if you’re chain free and have only just started looking, you should still have enough time if you act now.

“Our research shows that the situation for first time buyers is slowly improving: there are significantly more 95% LTV deals on the market than in January and, following the start of the government’s new 95% mortgage guarantee scheme on Monday, the availability of mortgages for buyers with a 5% deposit looks set to increase.

“While we welcome the government’s moves, there remains a long way to go if we’re going to see a reduction in the challenges that exist for first time buyers. 

“We would like the government to think about long-term solutions for making home ownership a reality for more Brits, particularly those who think it is out of their reach. 

“As the current economic environment remains uncertain, it comes as no surprise that the most popular mortgages are fixed, with homeowners opting for two-year deals in greater numbers than five-year deals – something which suggests people are more content to hedge their bets in the short term.”