Chancellor ‘ditches’ 1% mortgages ahead of Budget after backlash

Reports suggest Chancellor Jeremy Hunt has scrapped plans to introduce a 1% mortgage to help first-time buyers.

Chancellor Jeremy Hunt is seen walking along Downing Street with his Ministerial file. mortgages

Chancellor Jeremy Hunt (main picture) has abandoned a plan to introduce 1% mortgages just days before this week’s Budget, reports suggest.

Treasury insiders told the Daily Telegraph  that the Chancellor reacted to a backlash from lenders who warned there would be a surge in mortgage defaults.

Risky debt

Some banks said they would have to charge higher rates on 1% mortgages.

And property expert Charlie Davidson of London law firm Bishop & Sewell warned it could saddle a generation with risky levels of debt.

A portion of the loan would probably have had to be guaranteed by the Government.

Off the table

A Treasury insider said: “It’s off the table. It was one idea put forward by officials out of maybe 30. Headroom has drastically reduced since then, so we need to refocus the Budget.”

It was just a headline grabber.”

And a senior banking source said: “It was just a headline grabber. Most first-time buyers won’t be able to afford it anyway.”

New builds

Broker ‘Own New’ has just launched a new product, working closely with major developers, which it says will give some buyers of new build homes a 1% borrowing rate or even lower.

Own New’s ‘Rate Reducer’ is supported by Halifax, Virgin Money and Barratt Developments.

Skipton unveiled a deposit-free mortgage targeted at renters last year, which has had nearly 500 applications worth £62.4 million and made £29.7m completions. The mortgage is approved based on a tenant’s track record of paying rent.

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