A new Mortgage Guarantee Scheme
The Chancellor announced a new Mortgage Guarantee Scheme in the 2021 Spring Budget. Lenders who provide mortgages to homebuyers who can only afford a 5% deposit will now benefit from a government guarantee on those mortgages.
This is a scheme supported by some of the countries’ largest lenders, including:
- Lloyds
- NatWest
- Santander
- Barclays
- HSBC
All these lenders will be offering 95% mortgages from April 2021. Therefore, Sunak has simultaneously protected the banks (to encourage them to lend) while also giving people who can’t afford a big deposit the chance to buy their own home.
In expensive areas like many towns inside the M25, this policy will have little effect. But for the nation as a whole, it will allow people in inexpensive areas to get on the property ladder. This is all part of the government’s aim to ‘turn generation rent into generation buy’.