Govt to launch mortgage guarantee scheme in Budget

The Chancellor is to launch a UK mortgage guarantee scheme that will guarantee a portion of loans on homes in England worth up to £600,000, according to reports.

Several news outlets, including The Financial Times, have indicated that Rishi Sunak will use his Budget on Wednesday to unveil the scheme.

The move is anticipated to offer incentives to lenders and bring back 95% LTV mortgages that have “virtually disappeared” during the pandemic, according to the Treasury.

The new scheme will be available to existing homeowners as well as first-time buyers, with the government hoping the latter group in particular will make use of higher LTV mortgages to get onto the property ladder.

Commenting on the speculation of the mortgage guarantee scheme, Twenty7Tec sales director, Phil Bailey, said: “Mortgage activity levels since the stamp duty announcement have remained consistently high. Pushing up house prices, creating more competition and higher demand in the first-time buyer market.

“A potential 95% LTV mortgage scheme, backed by the governance and sitting alongside help to buy would go a long way in providing lenders with the confidence they need to further support this area of lending.

“Right now, lenders continue to be cautious and although we have seen an increase in 90% products to market – more than doubling since June – affordability, criteria and increased difficulty in securing these higher-risk mortgages continue to be challenging for many, especially those stepping onto the property ladder for the first time.

“If the government wants to achieve its new homes target at any point, a scheme to support the buyers of these properties is required.”

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