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Boost for first-time buyers as Rishi Sunak prepares to unveil new mortgage scheme

Tammy Hughes
·1 min read
<p>Rishi Sunak hopes the scheme will incentivise banks to lend to borrowers will small deposits. </p> (PA)

Rishi Sunak hopes the scheme will incentivise banks to lend to borrowers will small deposits.

(PA)

A mortgage guarantee scheme aimed at helping aspiring homeowners with small deposits onto the property ladder and firing up the market will feature in next week’s Budget.

Chancellor Rishi Sunak plans to incentivise lenders to provide mortgages to first time buyers, and current homeowners, with just 5% deposits to buy properties worth up to £600,000.

He will detail on Wednesday how the Government will offer lenders the guarantee they require to provide mortgages covering the remaining 95%.

The Treasury said low-deposit mortgages have “virtually disappeared” because of the economic impacts of the coronavirus pandemic.

Prime Minister Boris Johnson said: “I want generation rent to become generation buy and these 95% mortgage guarantees help to deliver this promise.

“Young people shouldn’t feel excluded from the chance of owning their own home and now it will be easier than ever to get onto the property ladder.”

The scheme, which will be subject to the usual affordability checks, will be available to lenders from April.

It is based on the Help to Buy mortgage guarantee scheme introduced in 2013 by David Cameron and George Osborne, that ran until June 2017.

Aiming to reinvigorate the market following the 2008 financial crisis, that scheme was said to have helped more than 100,000 households buy a home across the UK.

Mr Sunak said: “Owning a home is a dream for millions across the UK and we want to help as many people as possible. Saving up for a big deposit can often be difficult, and the pandemic has meant there are fewer low deposit mortgages available.”

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