Prime minister Boris Johnson has vowed to create ‘Generation Buy’ with a low deposit mortgage scheme that he says could be ‘revolutionary’ for young people.
First-time buyers have been finding it particularly hard to buy a property since the pandemic began as lenders have cut maximum loan to values (LTVs), meaning they require a bigger deposit to buy a home.
The stamp duty holiday in England and Northern Ireland was also granted to landlords and second home owners, further squeezing those looking to buy their first home as house prices have been pushed up and demand has increased.
In an interview with the Telegraph before the start of the Conservative Party conference, Johnson said a “huge” number of people were excluded from owning a home and he wanted to solve the problem with a mortgage scheme that permitted deposits as little as 5%.
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Speaking to the newspaper he said: “I think a huge, huge number of people feel totally excluded from capitalism, from the idea of home ownership, which is so vital for our society.
“And we’re going to fix that – Generation Buy is what we’re going for.”
According to the report, Johnson has asked his ministers to work on a scheme to encourage the availability of long-term fixed deals with 5% deposit mortgages.
The government withdrew the Help to Buy mortgage guarantee scheme at the end of 2016 which offered lenders the option to obtain a guarantee on a 95% mortgage.
If the borrower defaulted on the loan, the government would share in some of the losses.
In the two years it was available, the scheme helped to more than double the amount of 95% LTV deals available on the market.
Written by: Samantha Partington
Source: Your Money