09 Oct 2020
Boris expressed “We need now, to take forward one of the key proposals of our manifesto of 2019: giving young, first-time buyers the chance to take out a long-term, fixed-rate mortgage of up to 95% of the value of the home - vastly reducing the size of the deposit”.
In October 2013, the Help to Buy Mortgage Guarantee scheme was launched enabling first-time buyers to purchase a property on the open market with a 5% deposit. Halifax, the first to launch, ahead of time, surprised us all and sparked a boom in the housing market as all those would-be buyers saving for their 10% could immediately purchase. We experienced the same pattern when the Stamp Duty threshold was raised in July this year and I expect the launch of this new scheme will further exacerbate house prices.
In February of this year, there were nearly 600 95% mortgage products available, today we are now down to zero (unless there is some form of family support). Meaning a large proportion of the housing market is locked out.
Any policy that increases the number of products available to our clients will certainly be welcomed by us. However, we are concerned about the delivery.
Every week we report on how lenders are struggling to cope with demand due to resources. If a lender does raise their head above the parapet, they are in-fluxed with applications, and the product is quickly pulled. Lenders have been more inclined to offer these higher loan to values as long-term fixed deals which tie first-time buyers into higher rates, it will be interesting to see how the lenders price the 95% deals backed with Government support.
As soon as we have the detail, we’ll be reporting on it, watch this space…