New 95 per cent mortgage scheme launched

The UK Government has today, 19 April, opened a Mortgage Guarantee Scheme to help first-time buyers and current owners with 5 per cent deposits buy a house up to £600,000.

The Mortgage Guarantee scheme will be open until December 2022 and the UK Government will review the continuing need for the scheme towards the planned end date and then determine whether extending the period of eligibility would continue to deliver benefits for prospective homeowners.

This forms part of the UK Government’s Plan for Jobs, to help support the housing market and protect jobs and businesses across the housing supply chain. The Scheme is also one of a range of flexible homeownership options available, which include Help to Buy, Shared Ownership, and the First Homes Scheme.

Throughout the pandemic, Propertymark has worked hard to represent members and get more support for the sector. We successfully lobbied for business rates relief, commission to be included in furloughed pay and we led the campaign for the cut to property taxes across the UK. We continue to engage with decision-makers on behalf of our members and for the launch of the new Mortgage Guarantee Scheme, Propertymark is quoted alongside the Chancellor and Housing Secretary in the UK Government’s press release.

Rise in desire for homeownership

UK Government figures show that there is an increased desire for homeownership, with nearly 80 per cent of private renters saving for a deposit and a sharp reduction in 95 per cent mortgages available over the past year.

The figures also show more than two-thirds of private renters (68 per cent) and those living at home (72 per cent) want to buy, with the majority saying the pandemic has made them more aware of the importance and benefits of homeownership. 76 per cent of private renters and 70 per cent of those living at home started saving for a deposit during the pandemic.

Lenders offer Mortgage Guarantee scheme

Lenders will have the guarantee from the UK Government they need to provide mortgages that cover the other 95 per cent, subject to the usual affordability checks.

The Scheme is available from Lloyds, Santander, Barclays, HSBC, and NatWest who are launching mortgages under the scheme today with Virgin Money following next month. 

Over the past few months, there has been an increase in the number of prospective buyers and the number of house sales taking place. Coupled with the decision to extend the Stamp Duty holiday further, the Mortgage Guarantee Scheme will provide additional options for more people to become homeowners.

Access to finance and affordability plays a key role in the ability for people to purchase their dream home, so we are now very pleased to see further support for both first-time buyers and current homeowners looking to buy property or move up the housing ladder.

Mark Hayward Chief Policy Advisor | Propertymark

Making homeownership more accessible

UK Government official statistics show more homes were delivered in 2020 than in any year since 1987. A pledge was announced in 2019 to build 300,000 new and attractive homes a year with an investment of over £12bn in affordable housing over the next five years.   

Since 2010, more than 663,000 households have been helped to homeownership through UK Government schemes, however, 69 per cent of private renters and 63 per cent of those living at home who had investigated a mortgage said they cannot find many mortgages with a low deposit. The new 95 per cent mortgage scheme will make homeownership even more accessible.

First-time buyer schemes

Take a look at all the first-time schemes available and how they differ depending on where in the UK you are planning on buying your home.