Mortgage guarantee scheme ‘could be extended again’ in Autumn Statement
Jeremy Hunt could be set to announce the Government’s extension of the Mortgage Guarantee Scheme due to the high cost of living crisis.
In the face of soaring mortgage rates and mounting concerns for first-time buyers, Chancellor Jeremy Hunt is expected to extend the mortgage guarantee scheme for another year.
This move aims to alleviate the pressures on families and individuals struggling to secure affordable deals in an increasingly competitive housing market.
The mortgage guarantee scheme was originally introduced by Rishi Sunak, then Chancellor, in March 2021 as a measure to sustain the housing market during the pandemic. It enables prospective homeowners to purchase properties worth up to £600,000 with a minimal deposit of just 5 percent.
To encourage lending and to boost the housing market, the government underwrites a portion of the risk for lenders, stimulating market activity.
With the Bank of England raising its base rate from 0.1 percent in December 2021 to 5.25 percent, the affordability of mortgages has become a pressing issue. The sudden disappearance of cheap deals has left many first-time buyers and those seeking to remortgage in a vulnerable position.
The extension of the mortgage guarantee scheme aims to provide continued support to individuals struggling to navigate the challenging housing market landscape.
Chancellor Jeremy Hunt is expected to make the official announcement regarding the extension of the mortgage guarantee scheme at the upcoming Autumn Statement in November.
This 12-month extension will offer a lifeline to prospective homeowners, granting them additional time to take advantage of the scheme’s benefits. The decision to extend the scheme reflects the government’s recognition of the ongoing need for support in the housing market.
The closure of the Help to Buy policy in March this year left a void in the support available for first-time buyers.
While there have been calls for new initiatives to help first time buyers get on the housing ladder, Downing Street and the Treasury have ruled out reviving the George Osborne scheme. Concerns about potential inflationary effects have deterred the government from reintroducing a similar program.
The mortgage guarantee scheme has had a significant impact on the housing market since its inception. By allowing buyers to enter the market with a smaller deposit, the scheme has increased accessibility for many aspiring homeowners.
However, as mortgage rates soar and cheap deals vanish, there is a growing need for continued government support to ensure the stability and affordability of the housing market.
In addition to the extension of the mortgage guarantee scheme, the Treasury is reportedly exploring the possibility of introducing a new kind of Individual Savings Account (ISA) to encourage savings for first homes. This potential initiative aims to provide an alternative avenue for individuals to accumulate funds for property purchases.
Details regarding this new ISA are yet to be announced, but it signifies the government’s commitment to addressing the challenges faced by first-time buyers.
The Autumn Statement, scheduled to be delivered by Chancellor Jeremy Hunt, will shed further light on the government’s plans and initiatives to support the housing market.
It is a crucial event where policies and fiscal decisions are unveiled, providing insights into the government’s approach to address the challenges faced by homeowners and prospective buyers.
The extension of the mortgage guarantee scheme and the potential introduction of a new savings scheme demonstrate the government’s commitment to ensuring a stable and accessible housing market.
