One example is the UK mortgage guarantee scheme that started in April 2021. Yet it is scheduled to expire on June 30, 2024 — creating confusion for millions of future homebuyers. The new home purchase assistance program is a big step toward making home ownership more attainable for common buyers with small deposits. It helps banks get a government guarantee on any mortgage between 80% and 95% of a property’s value.
Since the launch of the mortgage guarantee scheme, real strides have been made in the property market. Over 53,000 mortgages have been pledged through the programme since its inception till the end of December 2024. The average property value for homes purchased or remortgaged through this scheme was £211,000. Shockingly, 86% of these transactions were for first-time buyers. This makes it easy to see why the scheme has been so successful at helping newcomers enter the housing market.
The scheme offered £1.6 billion in guarantees. This assistance supported a net mortgage of £10.7 billion. These figures unmistakably describe the scheme’s harmful effects. It was an important factor in allowing families to get into home ownership, despite values increasingly outpacing wages.
In February, the government announced plans to introduce “a new, permanent, comprehensive mortgage guarantee scheme.” This forthcoming scheme aims to “open the door to home ownership for more young families and hard-working renters.” Yet, no definitive schedule has yet been made public as to when this new program will start up.
While some lenders have provided 95% mortgages outside the scope of the existing guarantee scheme, it remains unclear how many will participate in the upcoming initiative. So are prospective buyers, who are more than a little concerned. They have no idea how they will move from the existing scheme to whatever replaces it and they rely heavily on that cash assistance.
Just a few weeks are left before the status quo is set to run out. Because there are still numerous unknowns, stakeholders in the housing market are intently awaiting new details on the government’s rollout of the new program.
“a new, permanent, comprehensive mortgage guarantee scheme” – The government
“open the door to home ownership for more young families and hard-working renters” – The government