New 95% state-guaranteed mortgages go on sale today as figures show demand for home ownership has skyrocketed during the foreclosure.
Nearly eight in 10 private tenants are now saving for a deposit, according to a survey released by the government.
The initiative, designed to encourage lenders to provide mortgages to those with only 5% deposits, was unveiled by Chancellor Rishi Sunak in the Budget.
But it comes as home sellers demand record highs for properties.
Last week Rightmove said average asking prices hit a new record high of £ 327,797 in April, up 2.1% month-over-month.
But ministers said they were responding to a 95% mortgage shortage, which they said was triggered by the coronavirus pandemic and its wider economic fallout.
Robert Jenrick, the housing secretary, said ministers wanted to help transform ‘Generation Rent’ into ‘Generation Buy’.
For too many people, “no matter how hard they work, homeownership can seem out of reach,” he said. “One of the biggest gaps in our country has been between those who can afford their own homes and those who can’t.”
Ministers also hope the program will help secure jobs in the construction sector, which has been strained during the pandemic.
Starting today, mortgages will be available from the big names in Lloyds Street, Santander, Barclays, HSBC and NatWest. Virgin Money will follow next month.
Mr Sunak said the government recognizes that saving for a large deposit can be difficult, especially for first-time buyers.
Miguel Sard, Managing Director of NatWest Home Buyers, suggested that the scheme, which will be available on properties up to £ 600,000, would especially help younger or first-time buyers.
The pandemic has resulted in a reduction in the availability of so-called high value mortgages.
The new government-backed guarantee will be valid for up to seven years after a mortgage begins, as evidence shows loans are unlikely to fail after such a long period.
The scheme is, however, designed as a temporary measure. Ministers said it will be open at least until December next year, when it is hoped the mortgage market will have recovered from the effects of the pandemic.
After that, the government will review the program to determine whether or not it should continue.
The ministers say that since 2010, more than 685,000 households have bought a house through government-supported programs, including home buying assistance and the right to buy.
According to Moneyfacts, the financial reporting website, 5% deposit mortgages have already started to make a comeback.
Moneyfacts recently found 34 deals for borrowers in April, up from just five in March.
But a year ago, over 160 transactions for borrowers with 5% deposits were available.
Michelle Andrews, Head of Home Purchasing at HSBC UK, said: “After such an eventful year, it is great that this program is making a real difference in enabling first-time buyers who didn’t think they had a chance to get a loan. mortgage and movers to get the keys to their new home. “
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This notice was published: 2021-04-18 22:01:00