Plans to make the mortgage guarantee scheme permanent will be discussed this autumn as the government vows to end its “stop-start” availability.
Among plans to improve housing and homeownership in the Autumn Budget, the government has committed to engaging with the mortgage industry over the autumn months to discuss the continued support of 95% loan-to-value (LTV) lending.
Written in the Budget 2024 document, the government said this would give “lenders confidence throughout the cycle, while making it easier for first-time buyers to realise the dream of homeownership.”
Mortgage brokers welcomed the news.
Jane King, mortgage and equity release adviser at Ash-Ridge Private Finance, said: “This is great news as stability prevents the sudden rushes to beat deadlines such as with stamp duty.
“Many lenders, however, have their own 95% products [that] do not rely on the indemnity insurance provided by the government.
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“Some new-build developers also offer the Deposit Unlock scheme to facilitate 95% lending, and so although this is a useful tool for 95% LTV borrowing, there are other schemes around. It is not the only option.”
Chris Sykes said: “While any scheme to encourage lenders to lend to borrowers with smaller deposits is welcomed, this isn’t big news. Many lenders do 95% LTV lending without using the scheme and at the same price point as the lenders that do.”
It was an otherwise quiet Budget for first-time buyers and homeowners, with no other direct incentives for buyers or sellers offered.
Stamp duty thresholds were not mentioned by Chancellor Rachel Reeves, which means they will revert to their previously lower levels at the end of March next year.
This re-affirms a window of opportunity for buyers as the nil-rate tax threshold up to £250,000 will drop to £125,000, while the first-time buyer relief nil-rate tax threshold of up to £425,000 will drop back down to £300,000.
Those purchasing second homes or buy to lets (BTLs), however, will face a rise in the stamp duty surcharge from 3% to 5%. This is expected to improve the availability of homes for first-time buyers to buy.
