Today sees the launch of a new government-backed mortgage scheme, allowing first-time buyers and current homeowners to secure a mortgage with a low deposit of just 5%.
The scheme was first announced in the Budget last month, and is available on home purchases up to £600,000.
Lenders can access a government guarantee so they can offer 95% loan-to-value mortgage deals, although borrowers will still be subject to the usual affordability checks.
Lloyds, Santander, Barclays, HSBC and NatWest have launched mortgages under the scheme today, with Virgin Money following next month.
The low-deposit mortgage scheme is part of a government commitment to tackle housing market inequality. According to official statistics, more homes were delivered in 2020 than in any year since 1987.
Commenting on the launch of the scheme, Housing Secretary Rt Hon Robert Jenrick MP said:
For too many people, no matter how hard they work, homeownership 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.
Chancellor of the Exchequer, Rishi Sunak said:
Every new homeowner and mover supports jobs right across the housing sector, but saving for a big enough deposit can be hard, especially for first time buyers.
By giving lenders the option of a government guarantee on 95% mortgages, many more products will become available, boosting the sector, creating new jobs and helping people achieve their dream of owning their own home.
The launch of this scheme follows a sharp decline in low-deposit mortgages during the past year and growing demand for access to mortgage products.
According to new government research, 68% of private renters and 72% of people living at home want to buy a property.
Data firm Defaqto has confirmed that borrowers now have 38 new mortgage products available from today, under this new government guarantee scheme.
It is the first time that all of the major High Street banks have offered 95% loan-to-value mortgages since May 2020.