In a move the government has said will convert “Generation Rent into Generation Buy” new 95 per cent mortgages will be offered on the high street again.
Robert Jenrick, Secretary of State For Housing, hailed the introduction of the Government-backed scheme which is designed to both bolster lender confidence and to assist people with 5 per cent deposits to get onto the housing ladder.
Announced in the Budget last month, the scheme is open to mortgage applications on properties worth up to £600,000, and was advanced by the Chancellor in the wake of the pandemic leading to a sharp reduction in the availability of high loan-to-value mortgage products, particularly for prospective homebuyers with small deposits. Under the terms of the scheme, in the event of repossessions, the Government will compensate mortgage lenders for a portion of the net losses suffered.
Government figures published show that demand for home ownership has soared during lockdown with nearly 80 per cent of private renters now saving for a deposit. High street lenders including NatWest, Lloyds, Barclays, Santander, and HSBC are launching mortgages under the scheme imminently, and Virgin Money is set to follow next month. The scheme will last until December 2022, at which point ministers anticipate the market will no longer need state guarantees to offer such products.
Mr Jenrick said that the chasm between homeowners and home-renters was, “one of the biggest divides in our country” but was confident that the new Government-backed mortgage products would remove the “prohibitive burden of a large deposit” from prospective first-time buyers, stating that Ministers are determined to help people, “get their feet on the housing ladder in an easy and affordable way, to level up this country”.
Fresh figures show that 68 per cent of private renters, and 72 per cent of those living at home, want to buy their own property, with the majority saying the pandemic has made them more aware of the benefits of home ownership.