– Announcement –
The mortgage guarantee scheme 'could be extended again' in the Autumn Statement
Jeremy Hunt could announce the Government's extension of the mortgage guarantee scheme due to the high cost of living crisis.
Faced with rising mortgage rates and growing concerns for first-time buyers, Chancellor Jeremy Hunt is expected to extend the mortgage guarantee scheme for another year.
– Announcement –
This measure aims to ease the pressures on families and individuals struggling to secure affordable deals in an increasingly competitive housing market.
The mortgage guarantee scheme was originally introduced by Rishi Sunak, then chancellor, in March 2021 as a measure to support the housing market during the pandemic. It allows prospective owners to buy properties worth up to £600,000 with a minimum deposit of just 5 per cent.
To encourage lending and boost the housing market, the government underwrites a portion of the risk for lenders, stimulating market activity.
With the Bank of England raising its base rate by 0.1% in December 2021 to 5.25%, mortgage affordability has become a pressing issue. The sudden disappearance of cheap deals has left many first-time buyers and those looking to re-mortgage in a vulnerable position.
The extension of the mortgage guarantee scheme aims to provide continued support to people struggling to navigate the challenging housing market landscape.
Chancellor Jeremy Hunt is expected to make the official announcement on the extension of the mortgage guarantee scheme at the next Autumn Statement in November.
This 12-month extension will provide a lifeline to prospective owners, giving them additional time to take advantage of the benefits of the program. The decision to extend the scheme reflects the government's recognition of the ongoing need to support the housing market.
The closure of the Help to Buy policy in March this year left a gap in the assistance available to first-time buyers.
Despite calls for new initiatives to help first-time buyers get on the housing ladder, Downing Street and the Treasury have ruled out reviving George Osborne's plan. Concerns about possible inflationary effects have deterred the government from reintroducing a similar program.
The mortgage guarantee scheme has had a significant impact on the housing market since its inception. By enabling buyers to enter the market with a smaller deposit, the scheme has increased affordability for many would-be homeowners.
However, as mortgage rates rise and bargains disappear, there is a growing need for continued government support to ensure housing market stability and affordability.
In addition to the expansion of the mortgage guarantee scheme, the Treasury is exploring the possibility of introducing a new type of Individual Savings Account (ISA) to encourage the savings of first households. This potential initiative aims to provide an alternative route for individuals to accumulate funds for the purchase of property.
Details about this new ISA have yet to be announced, but it signifies the government's commitment to addressing the challenges facing first-time buyers.
The autumn statement, expected by chancellor Jeremy Hunt, will shed more light on the government's plans and initiatives to support the housing market.
It is a crucial event where tax policies and decisions are publicised, providing insight into the Government's approach to addressing the challenges facing landlords and potential buyers.
The expansion of the mortgage guarantee scheme and the possible implementation of a new savings plan demonstrate the government's commitment to guaranteeing a stable and accessible housing market.