Schedule to end this month, a government program aimed at encouraging UK lenders to provide mortgages with only a 5% down payment. However, there is no word yet on when a replacement for this program will begin.
The mortgage guarantee program was launched in April 2021 to assist buyers with low deposits in purchasing property.
Under the program, banks are able to obtain a guarantee from the government for the portion of the mortgage between 80% and 95% of the property’s value. In the event of financial difficulties and property repossession, the government would cover the losses incurred by the lender on this portion.
Not all lenders offering mortgages with a 5% down payment have utilized the program. However, it was used for the completion of more than 53,000 mortgages between its launch and the end of December 2024, with 86% of those being first-time buyer purchases.
In February, the government announced plans for a new comprehensive mortgage guarantee program that will support young families and hardworking renters in becoming homeowners. However, no detailed information has been disclosed as of yet. The current program is only open to new home loans until June 30.
By making the mortgage guarantee program permanent and comprehensive, the ministers believed that it will give banks and building societies the necessary confidence to continue offering mortgages with low deposits.
Last week, it was reported that the total value of guarantees provided by the program was £1.6bn, while the total value of mortgages supported by it was £10.7bn. The mean value of a property bought or remortgaged via the program was £211,000.
The mortgage guarantee program was launched in April 2021 to assist buyers with low deposits in purchasing property.
Under the program, banks are able to obtain a guarantee from the government for the portion of the mortgage between 80% and 95% of the property’s value. In the event of financial difficulties and property repossession, the government would cover the losses incurred by the lender on this portion.
Not all lenders offering mortgages with a 5% down payment have utilized the program. However, it was used for the completion of more than 53,000 mortgages between its launch and the end of December 2024, with 86% of those being first-time buyer purchases.
In February, the government announced plans for a new comprehensive mortgage guarantee program that will support young families and hardworking renters in becoming homeowners. However, no detailed information has been disclosed as of yet. The current program is only open to new home loans until June 30.
By making the mortgage guarantee program permanent and comprehensive, the ministers believed that it will give banks and building societies the necessary confidence to continue offering mortgages with low deposits.
Last week, it was reported that the total value of guarantees provided by the program was £1.6bn, while the total value of mortgages supported by it was £10.7bn. The mean value of a property bought or remortgaged via the program was £211,000.
