Ultra-low deposit mortgages are set to make a comeback with a new 5% deposit home loan guarantee scheme. The Chancellor Rishi Sunak today announced the scheme will come into force imminently, with dozens of firms signed up.
Rishi Sunak announced a “mortgage guarantee”, telling MPs: “Lenders who provide mortgages to homebuyers who can only afford a 5% deposit will benefit from a Government guarantee on those mortgages.”
He added: “A policy that gives people who can’t afford a big deposit the chance to buy their own home.
“As the Prime Minister has said, we want to turn generation rent into generation buy.”
READ MORE: Budget 2021 LIVE: Rishi Sunak to unveil plan TODAY
What else did the Chancellor announce for the housing market?
Mr Sunak also said the Stamp Duty cut will continue until the end of June.
He added the nil rate band will be set at £250,000 – double its standard level – until the end of September.
He said: “I can announce today the £500,000 nil rate band will not end on March 31, it will end on June 30.
“Then, to smooth the transition back to normal, the nil rate band will be £250,000, double its standard level, until the end of September – and we will only return to the usual level of £125,000 from October 1.”
Marc von Grundherr, director of lettings and estate agent Benham and Reeves, commented’: “While Help to Buy in its various forms has helped homebuyers to an extent, it’s also done a good job of pushing house prices higher and homeownership even further out of reach for many.
“To roll this sort of counterproductive initiative out to the whole of the market wouldn’t be so bad if the government also addressed the issue of supply.
“If you have trouble climbing the stairs you need to add a handrail, not increase the size of the staircase. However, the Government has, yet again, chosen to do just this.”
With regards to the wider Budget, Labour leader Sir Kier Starmer said in the Commons: “Behind the spin, the videos and the photo-ops, we all know the Chancellor doesn’t believe in an active and enterprising government.
“We know he’s itching to get back to his free-market principles and to pull away support as quickly as he can. One day these restrictions will end, one day we’ll all be able to take our masks off and so will the Chancellor, and then you’ll see who he really is.
“And this Budget sets it up perfectly because this is a Budget that didn’t even attempt to rebuild the foundations of our economy or to secure the country’s long-term prosperity.
“Instead, it did the job the Chancellor always intended, a quick-fix, papering over the cracks. The party opposite spent a decade weakening the foundations of our economy, now they pretend they can rebuild it.
“But the truth is, they won’t confront what went wrong in the past and they have no plan for the future.”