Property expert slams 1% mortgages as ‘unworkable’

Charlie Davidson of law firm Bishop & Sewell says 1% mortgages will leave first time buyers with huge debts.

Charlie Davidson - Bishop & Sewell

The Government’s proposal to introduce a new 1% deposit mortgages scheme to help young people onto the property ladder could have ‘a dire impact’, a property expert warns.

It is unworkable in practice and could saddle a generation with risky levels of debt, according to Charlie Davidson of London law firm Bishop & Sewell (main picture).

Key pledge

Prime Minister Rishi Sunak and Chancellor Jeremy Hunt are said to be considering 1% mortgages as a key election pledge to be included in next month’s Budget.

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

In practice a 1% deposit policy could have a dire impact.”

“Removing barriers to home ownership is a laudable aim and young people do need support to get onto the housing ladder, but in practice a 1% deposit policy could have a dire impact,” Davidson says.


“For one thing, it seems incredibly unwise to incentivise people to saddle themselves with such high levels of debt,” he says.

“It’s all very well taking on a 99% loan-to-value (LTV) mortgage if property prices always rise, but the reality is that many people could quickly face negative equity should property values drop, or simply to not rise in line with interest rates.”

Increases in  mortgages rates, he says, could also leave homeowners unable to keep up the repayments.

Square one

Davidson also says that each property deal requires a 10% deposit, so first time buyers are still left with the problem of how to raise that amount of cash.

If the buyers were unable to find the 10% deposit, then then a lower amount would need to be agreed across the whole chain, he says.

“Given that most young people will not be selling their own property, they will need to meet the deposit from their personal savings/resources, which puts them back to square one.”

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