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Mortgage guarantee scheme extended by one year

  • 20/12/2022
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Mortgage guarantee scheme extended by one year
The HM Treasury has confirmed that the mortgage guarantee scheme will run for another year to offer more support to first-time buyers.

The scheme was launched in April last year as higher loan to value mortgages almost vanished from the market and was due to end on 31 December.

Over the past year it has helped around 24,000 households with around 85 per cent of those being first-time buyers. The value of mortgage completions was estimated to be around £4.4bn.

The scheme works by offering lenders the option to buy a guarantee on mortgages for borrowers with lower deposits. This compensates lenders for a portion of net losses if the property has to be repossessed.

The guarantee applies down to 90 per cent of the purchase value to the property covering 95 per cent the net losses. The lender retains five per cent risk in the portion of losses covered by the guarantee.

Chief secretary to the Treasury, John Glen MP said: “For hard-working families facing today’s challenging economic conditions, it’s right that we continue to help them secure their first home or move into their dream house.

“Extending this scheme means thousands more have the chance to benefit and supports the market as we navigate through these difficult times.”

It was reported over the weekend by The Sunday Times that an extension of the scheme was on the cards as there are concerns that higher LTV mortgages could be pulled from the market due to recession and expected house price falls.

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