Chancellor Rishi Sunak today announced extra help for aspiring home-owners to get onto the property ladder as he pledged a new mortgage guarantee scheme.
Mr Sunak's initiative will incentivise lenders to provide mortgages to first-time buyers as well as current home-owners with just five per cent deposits to buy properties worth up to £600,000.
The Government will offer lenders the guarantee they require to provide mortgages covering the remaining 95 per cent.
The creation of the new scheme came as Mr Sunak was also expected to announce an extension of the stamp duty holiday.
Last July the Chancellor exempted most buyers from the levy if they completed their transactions before March 31, 2021 - saving people up to £15,000 - and leaving would-be homeowners racing to meet the deadline.
But that deadline is now expected to be pushed back to the end of June to provide a further boost to the housing market.
Chancellor Rishi Sunak today announced a new mortgage guarantee scheme to help aspiring home-owners to get onto the property ladder
Mr Sunak's new initiative will enable people with a five per cent deposit to secure a mortgage
Recent analysis by the Centre for Policy Studies (CPS) think tank said the stamp duty holiday had propelled house sales to their highest level since before the 2008 financial crisis
The stamp duty policy covers the sale of property worth up to £500,000, and will cost around £1billion to implement.
Critics had argued that failing to extend the holiday would result in a cliff-edge, jeopardising hundreds of thousands of potential sales.
The Government is hoping its new mortgage guarantee scheme will help to turn more of 'generation rent' into 'generation buy'.
The Treasury said low-deposit mortgages had 'virtually disappeared' because of the economic impacts of the coronavirus pandemic.
The scheme, which will be subject to the usual affordability checks, will be available to lenders from April.
It is based on the Help to Buy mortgage guarantee scheme introduced in 2013 by David Cameron and George Osborne, that ran until June 2017.
Aiming to reinvigorate the market following the 2008 financial crisis, that scheme – distinct from the Help to Buy equity loan scheme – was said to have helped more than 100,000 households buy a home across the UK.
But there were also concerns that it artificially inflated prices and housebuilders' profits.