Sunak considering one per cent deposit mortgage scheme in bid to win over young voters: report
The Treasury is looking at introducing a scheme guaranteeing mortgages for first-time buyers with deposits of just one per cent, it has been reported.
Unnamed government sources told The Independent that Rishi Sunak and Chancellor Jeremy Hunt are considering the idea as part of the Spring Budget on 6 March, aiming to win over young voters by helping them get on the property ladder.
The government previously backed five per cent deposit – 95 per cent loan-to-value (LTV) – mortgages for new-build homes under the Help to Buy scheme.
A 95 per cent LTV means the buyer can borrow up to 95 per cent of the home’s purchase price, with the remainder made up of a deposit. Lenders typically ask for deposits of at least 10 per cent.
This cost has posed a major challenge for many first-time buyers, exacerbated by skyrocketing house prices in recent years.
The previous Budget in November saw Hunt extend the government’s mortgage guarantee scheme – which backs five per cent deposits on homes worth up to £600,000 – to June 2025.
The government protects lenders of the 95 per cent loans by pledging to cover losses in the case that the borrower cannot pay their mortgage.
Experts said the change to the scheme, which was originally due to end in December, did not go far enough. Critics argue the scheme can only help a small portion of buyers, with most opting to save for a bigger deposit.
When asked about a one per cent deposit scheme, a Treasury spokesperson told City A.M. that the current measures had “enabled over 39,000 households to buy a home – over 86 per cent of which are first time buyers”.
They added: “At the Autumn Statement, the scheme was extended for a further two years to provide additional support for first time buyers.”
Deputy Labour leader Angela Rayner commented: “After 14 years of paper promises on housing, the Tory government have completely failed to address the supply of affordable homes, or lift a finger to reform our broken planning system which has forced a generation of young people to give up on the dream of home ownership.”