Africana55 Radio 
This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
Rishi Sunak announced the scheme in his annual economic update, in what was widely welcomed as good news for those trying to get on the property ladder. The scheme is backed by the Government and will help individuals with a small, five percent deposit. Lenders will be able to enact the scheme from today, forging ahead for those hoping to purchase property.
Lloyds, Santander, Barclays, HSBC and NatWest will be launching mortgages under the scheme today, and will be followed by Virgin Money who will begin offering the new mortgage deal next month.
Housing Secretary, Robert Jenrick, commented on the new deal to help people become homeowners.
He said: “For too many people, no matter how hard they work, home ownership can seem out of reach. One of the biggest divides in our country has been between those who can afford their own home and those who cannot. That’s why we are determined to do everything we can to help hard-working families and prospective first-time buyers get their feet on the housing ladder in an easy and affordable way, to level up this country.
“The new mortgage guarantee scheme which comes into effect today will give providers the confidence to lend and help families and young people get on the property ladder without the prohibitive burden of a large deposit.”
As a result of the pandemic, it has been difficult to secure lower deposit mortgages.
Options for a 95 percent mortgage have significantly dwindled over the last year as lenders have become cautious.
This appears to revolve around fears individuals may default on their mortgage.
The new scheme, therefore, is likely to provide hope to those hoping to secure a deal.
Nick Barnes, Head of Research at Chestertons, also spoke about the new release, saying: "The sales market shows no sign of slowing down, with buyers still motivated by a combination of the Stamp Duty holiday, the easing of lockdown restrictions and the search for homes that match their revised housing requirements in light of the changes brought about by the coronavirus.
“The market is likely to receive a further boost with the commencement of the Government’s new Mortgage Guarantee scheme which lenders will operate from today. With 46 percent more properties available to buy at the end of March than a year ago, buyers will have a great chance of finding their ideal property.”
Harry Fenner, CEO of Navana Property, commented on what this release may signal for the mortgage market, stating: "Following on from the Government’s 95 per cent mortgage guarantee in the Budget, some lenders have started offering a 40-year fixed rate mortgage. Given current uncertainty about the future, accentuated by Covid-19, some buyers will want this level of security and safety in their homes.
The long-term fixed rate mortgage sets a precedent for new and exciting innovation in the property market which will help to get some people on the property ladder for the first time. Given the impact of the pandemic on our rapidly changing domestic economy, greater choice and access is what buyers need right now, and this scheme certainly delivers that."
And Rosie Fish, mortgage expert at Habito, added: "First time buyers have faced severely limited choice when it comes to mortgages with lower deposits since Covid-19 struck back in March 2020. We’re hopeful with this reintroduction of five percent deposit products will mean that many more buyers will be able to get on the ladder sooner than they would otherwise.
"That said, access to these deals will remain tough due to lenders imposing harder criteria for borrowers to meet - applicant's credit scores will have to be 'excellent,' rather than just 'good'.
"There are also restrictions over new build and flats, and the interest rates charged will be higher than the rates we saw pre-Covid. It will be a welcome move for many who've been priced out of buying in the last year, but it's also unlikely to solve for key housing market issues, primarily rising house prices relative to incomes."
The scheme, however, is intended to be a temporary measure to help the housing market, and will operate for new mortgage applications from April 2021 to December 2022. This is as the Government believes the lack of 95 percent mortgages is symptomatic of the pandemic, rather than issues with the mortgage market.
The end date is to be reviewed closer to the time to see if the scheme still remains necessary.