Relaxing stress tests and changing loan-to-income thresholds are further ways the Government is looking to help more people get onto the property ladder.
The Government is honouring its manifesto commitment to support first-time buyers by confirming the implementation of a new, permanent Mortgage Guarantee Scheme.
A temporary precursor was introduced in April 2021 in response to risk-averse lenders pulling higher loan-to-value (LTV) deals from the market during the COVID-19 pandemic. It sought to improve the supply of mortgages available to those with smaller deposits by offering lenders a guarantee that the Government would cover some of the costs if a borrower defaulted.
Despite ending on 30 June 2025, there are still many obstacles preventing would-be borrowers from getting on the property ladder which justify the need for a more permanent solution.
“First-time buyers are the lifeblood of the mortgage market, and they have been facing an excruciating situation to afford a mortgage, amid a short supply of affordable housing,” said Rachel Springall, Finance Expert at Moneyfactscompare.co.uk.
Indeed, Matthew Pennycook, Minister of State for Housing and Planning, earlier this year recognised “that we now have a generation lock out of homeownership” – a situation he stated the Government is “determined to change”.
