A new mortgage guarantee scheme was announced this spring, with the goal being to help first-time buyers and aspiring home movers purchase a home with a smaller deposit.
The initiative, which will be available for new mortgages up to 31st December 2022, is intended to increase the availability of mortgages on new or existing properties for those with small deposits.
This comes after a plummet in 95% mortgages made available last year, as lenders lost confidence in the UK's financial stability due to the pandemic.
How will it work?
It is based on the Help to Buy mortgage guarantee scheme that ran from October 2013 to December 2016, which backed mortgages for 104,736 purchases – 2.7% of all those in the UK.
The average property bought through the scheme was worth £159,170, compared to an average UK house price of £223,000.
In terms of restrictions with the latest initiative, only first-time buyers or those moving homes are eligible to apply, not those wishing to buy second homes or buy-to-let properties.
First-time buyers and home-movers form a vital cog in the economy and housing market, so government support will play a crucial role in restoring the balance.
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