The extension of the scheme, which supports the availability of 95 per cent LTV mortgages and was originally due to close by the end of this year, was confirmed in the Autumn Statement delivered by Chancellor Jeremy Hunt on Wednesday
Aiming to support homebuyers with smaller deposits, the government has extended the Mortgage Guarantee Scheme for an additional 18 months until the end of June 2025.
The extension of the scheme, which supports the availability of 95 per cent LTV mortgages and was originally due to close by the end of this year, was confirmed in the Autumn Statement delivered by Chancellor Jeremy Hunt on Wednesday.
The Mortgage Guarantee Scheme was first announced in the Spring Budget of 2021 to provide home buyers the opportunity to secure mortgages with only a 5 per cent deposit. The scheme is available to all homebuyers in the country, not just FTBs, on properties valued at £600,000. Lenders such as banks and building societies are encouraged to offer 95 per cent mortgages with the UK government guaranteeing outstanding loans.
The government, in December 2022, also extended the scheme by one year.
Industry experts welcomed the news of the program’s extension, but at the same time, many of them felt that the Autumn Statement where the housing market is concerned was disappointing overall.
It is good news that the Mortgage Guarantee Scheme has been extended as this will provide lenders with the incentive to offer mortgages to people with small deposits, James Bull, mortgage broker at JB Mortgages, commented. Nevertheless, this is just a small sector of buyers, so it will do little to lift a flagging housing market.
Karen Noye, mortgage expert at Quilter, said that the extension of the Mortgage Guarantee scheme until June 2025 is “really the least the government can do for FTBs.”
Noye said: The scheme has so far not been particularly effective and will likely continue not to be. Generally, FTBs will find themselves limited to a maximum of 4.5 times their annual income. For those on the average salary, this means they can only borrow just more than £150,000 giving the buyer not much option in the market.
