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In the month since the Government announced a new mortgage guarantee scheme designed to encourage lenders to offer mortgages to first-time buyers with a 5%, the number of deals available to these first-time buyers has increased, but rates within this market have also risen.
Research carried out by Moneyfacts.co.uk found that between the 1 March and the 1 April, the number of mortgage deals available at 95% loan-to-value (LTV), which requires a 5% deposit/equity, increased by 29, up from five to 34. This increase in deals comes before the Government’s mortgage guarantee scheme fully launched, which is expected to take place this month and should see the number of mortgage deals available at 95% LTV increase further.
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The Mortgage Guarantee Scheme will boost the housing market according to Andy Scaife, chief executive of O’Neill Patient.
During the Budget, the government confirmed the creation of a Mortgage Guarantee Scheme, which is designed to encourage lenders to lend at 95% LTV.
Scaife believes this scheme is a better option to stamp duty, as he believes it is a long-term solution rather than a short-term fix.
He said: “Of course, no-one wants to see a sharp drop in housing transactions following the end of the stamp duty holiday; and this 95% mortgage guarantee will be a good way to keep the market steady and help those with small deposits.
A combination of rising house prices, mortgage lenders withdrawing deals for those with a 10% or less deposit, and savings rates at a historic low, resulted in potential first-time buyers facing a highly challenging market last year