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95% of “Lifeline” Mortgage Guarantee Scheme Low Penetration

The government’s 95% mortgage guarantee program has been hit by “disappointing adoption” with 18,000 completions recorded since it was launched last April.

First announced in the budget and launched in April 2021, 95% mortgage guarantee system Helps first-time buyers or current homeowners secure a mortgage to buy a home up to £600,000 with just a 5% deposit. The government provides lenders with the necessary guarantees to provide mortgages that cover the remaining 95%, subject to regular affordability checks.

The latest figures from LevelUp, Housing and Communities put the value of government mortgage guarantees at £474m and the value of properties totaling around £3.42bn.

The report revealed that there have been 17,996 completions under the scheme since it was launched last April. by industry commentators.

This represents 6.5% of all mortgages completed in the UK between April 2021 and the end of March this year.

In the first three months of the year, there were 1,692 completions in January, 1,781 in February, and 2,140 in March.

Approximately 86% of mortgage completions are from first-time buyers, with this type of buyer closing fixed at 15,345.

The average property value is estimated at £190,166, which compares with the average UK house price of £278,436.

The report added that 67% of properties purchased were for £200,000 or less, 28% for £125,000 or less and 21% for £250,000 or more.

The majority of borrowers under this scheme have a maximum household income of £50,000, with a median household income of £46,000. The median household income is £50,382.

By region, England accounted for 68% of the total, with the largest regions being the North West at 12% and the South East at 11%. All other regions were below 10%.

Scotland accounted for 23% of completions, while Wales and Northern Ireland accounted for 5% and 3% respectively.

“It should be a lifeline”

Rosie Hooper, Chartered Financial Planner at Quilter, said: Along with successive rate hikes to save. Therefore, only 17,996 mortgages were completed between April 2021 and March 2022, indicating that the number of mortgages completed with the help of the government’s mortgage guarantee scheme remains relatively low. is somewhat surprising.

“The scheme, which should serve as a lifeline for those struggling to climb the housing ladder, gained popularity in the second half of its first year, with 11,461 cases registered in the six months from October to March 2022. Transactions have been completed: just 6,535 in the six months from April to September 2021. Utilization rates, however, were modest at best, suggesting that lenders had more time to market before the government implemented the scheme. identified gaps in and therefore own 95% of their mortgage products.

“For example, Nationwide offers ancillary products that boost borrowing power for first-time buyers, while other lenders aim to help those looking to secure deals in the high-value loan space. In addition, the low take-up was prompted by the Bank of Mom and Dad stepping in to increase first-time buyer deposits and enable low-LTV trades. could be the result.

95% of “Lifeline” Mortgage Guarantee Scheme Low Penetration

Source link 95% of “Lifeline” Mortgage Guarantee Scheme Low Penetration

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