According to multiple media reports, in a meeting with banking leaders today Chancellor Kwasi Kwarteng and the Treasury mooted the possibility of lengthening the timeline on the scheme which is due to expire at the end of this year.
Media reports also suggested that rising interest rates in the buy-to-let sector and vulnerable customers on interest-only mortgages were discussed.
The scheme was introduced in 2021 to increase the availability of 95 per cent loan-to-value mortgages after they were withdrawn during the pandemic.
It offers lenders the option to buy a guarantee on a mortgage where the borrower has a deposit of only five per cent. It compensates lenders for a portion of net losses suffered in the case of repossession.
The guarantee applies down to 80 per cent of purchase value of the guaranteed property covering 95 per cent of these net losses and the lender retains a five per cent risk in portion of losses covered by the guarantee.
Figures from earlier this year showed that the scheme had supported around £3.2bn in loans since it was launched in April last year.
The value of the mortgage guarantee was £474m and the value of the properties was pegged at £3.42bn. It also noted that there were 17,966 completions since its launch.
Rachel Dixon, mortgage broker at RH Dixon, said that she had been talking about them with every client as they had priced some cases up to 2.25 per cent lower.
She pointed to a Natwest product which was priced at 2.95 per cent versus a two-year fixed rate at 5.4 per cent.
The Treasury declined to comment.
