Treasury ‘considering’ 1% deposit mortgages for first-time buyers - report

The Government’s latest attempt to bolster the property appears to be 1% deposit mortgages.

Chancellor Jeremy Hunt is reported to be considering introducing 99% loan-to-value mortgages as part of a housing strategy to help young people and first-time buyers get on the property ladder.

A Treasury-backed scheme to help “generation rent” is one of the ideas being discussed for inclusion in March’s Spring Budget, The Independent reports.
Property professionals seem unsure though.

Speaking to the Newspage agency David Sharpstone, director at CIS Mortgage advice, said: “The proposal for 1% deposit mortgages, aimed at assisting 'generation rent' in owning homes, presents an innovative yet complex solution to the affordability crisis in the housing market. While this approach significantly lowers the barrier to entry for first-time buyers, concerns about its long-term sustainability and impact on the market are valid. It's crucial to consider its potential to once again significantly inflate property prices and increase financial risk for both lenders and borrowers.

“There needs to be a broader strategy to boost supply and ensure housing market stability. Careful, balanced implementation is essential for this scheme to effectively aid young homebuyers without unintended negative consequences. As a mortgage broker, it's easy to be hopeful about the short-term wins, but I also worry about the dangers of negative equity. Such a small deposit will leave borrowers very exposed.”

Rohit Kohli, director at The Mortgage Shop, added: “It's high time for some real action on making housing affordable and significantly boosting the number of homes we build, instead of these quick fixes that don't tackle the big picture.”