The Government’s Mortgage Guarantee Scheme will be extended by a year to the end of December 2023, helping more people with 5% deposits on to the property ladder.

Under the scheme the government offers lenders the financial guarantees they need to provide mortgages that cover the other 95%, subject to the usual affordability checks, on a house worth up to £600,000.

It had been due to stop at the end of this year but instead will continue until the end of 2023.

FIRST-TIME BUYERS

From the scheme’s launch in April 2021 to June 2022, it has helped 24,153 buyers purchase a home, 85% of whom were first-time buyers.

The total value of mortgages supported by the initiative over that period was £4.4 billion.

John Glen (pictured), Chief Secretary to the Treasury, says: “For hard-working families facing today’s challenging economic conditions, it’s right that we continue to help them secure their first home or move into their dream house.

“Extending this scheme means thousands more have the chance to benefit, and supports the market as we navigate through these difficult times.”

Charles Roe, Director of Mortgages at UK Finance, adds: “The mortgage guarantee scheme has already helped thousands of first-time buyers, and we support the extension of measures which enable borrowers to realise their dream of home ownership, through lower deposits.”

SOAR

Charlotte Nixon, mortgage expert at Quilter, says that the popularity of the scheme may soar next year as lenders shy away from high loan-to-value lending.

And she warns: “While the industry should be supportive of anything that helps get people on the property ladder, having a very high loan-to-value mortgage does expose buyers to the risks of negative equity. If house prices do drop, then only having 5% equity in a property does not leave the buyer with much equity to play with.”