The 99% Mortgage Explained
Date Published: 24 January 2024
The UK government is reportedly considering backing home loans that would only need a one per cent deposit.
Prime minister Rishi Sunak is reportedly considering a new Government-backed 99 per cent mortgage scheme, according to the Independent.
Details on the scheme are scant, but the idea is that it would remove one of the major hurdles — saving for a deposit — for would-be first-time buyers trying to get a foot on the ladder by allowing them to do so with just a one per cent deposit.
The news comes ahead of the Spring Budget, which is due to be delivered by Chancellor Jeremy Hunt on March 6.
Housing is set to be a major issue in the 2024 UK election, and the Budget is expected to deliver some sweeteners for buyers and builders following disappointment that the property industry was largely ignored in the 2023 Autumn Statement.
But while some have welcomed the proposal as a much-needed boost for first-time buyers, others have warned it could inflate house prices and put homeowners at risk of negative equity.
The government currently underwrites a different scheme for 95 per cent mortgages, where buyers need to save five per cent for a deposit.
Outside of this scheme, most lenders expect a deposit of at least 10 per cent to secure a mortgage, and rates are becoming increasingly competitive the lower loan to value needed to buy.
The best rates currently available – around four per cent interest – are available to those with a deposit of at least 40 per cent.
Source: The Standard