Mortgage guarantee scheme to be extended

This comes amid fears that first-time buyer market could dry up in the new year, with customers being priced out of the market.

Coupled with the news that households will be facing a £250-a-month increase in their mortgage payments next year, this potential extension will come as a relief to many.

Launched by the government in April 2021 after 95% loan-to-value (LTV) mortgages vanished during the pandemic, the scheme has helped over 20,000 first-time buyers secure home loans with small deposits.

Under the guarantee scheme, banks buy an insurance policy from the government for mortgage loans taken out by buyers with a deposit of less than 10%.

The program covers up to 95% of the losses upon failures to keep up repayments and defaults. Between April 2021 and June 2022, 24,153 mortgages worth £4.4 billion were underwritten as a result of the scheme, with the majority of them belonging to first-time buyers.

Due to end on December 31, the impending closing of scheme has stoked fears that this could lead to low-deposit mortgage deals disappearing again, amid fears over falling house prices and a forthcoming recession.

According to the Times, Treasury sources said the government was deliberating whether to extend the scheme further, but that it was more likely to continue than not.

An announcement on its future is expected early this week.