News & insights
Government backed 95% mortgage scheme will keep the market buoyant and heralds even busier times ahead for property professionals.
In last month’s Budget, the
Government announced a new 95% mortgage guarantee scheme that enables
homebuyers to secure a mortgage with as little as a 5% deposit.
The new low deposit mortgages,
which will see the Government underwrite the portion of the mortgage over 80%
(so, with a 95 per cent loan, the remaining 15 per cent) have been heralded by
many as a welcome boost for first time buyers struggling to get on the property
ladder. However, some experts have pointed out they are likely to put further strain
on already time pushed property professionals.
Managing Director of Barrows and
Forrester Estate Agents, James Forrester, commented:
'The recently announced ‘Boris
Mortgage’ is on the face of it a welcome idea to bolster the property market.
But with transactions at a near high again, there is a danger that this
initiative will lead to overheating. Not
just an issue for buyers in terms of ever climbing house prices but also in
terms of more time added to the already sizable delays being seen at the back
end of the transaction process.’
Thankfully Thames Water Property
Searches are here to help, with our teams working around the clock to ensure
the search element of each and every one of your property transactions proceeds
as swiftly and smoothly as possible.
A plethora of high street
lenders, including Barclays, HSBC, Lloyds Banks, NatWest and Santander have
signed up for the mortgage scheme which can be used for purchases of property
with a maximum value of £600,000 and is open to both first-time buyers and
existing home owners.
Low deposit mortgages had
virtually vanished from the lending landscape in the wake of the pandemic. The
new scheme is designed to help those unable to come up with a hefty deposit,
allowing them access to a much greater range of mortgages. It shares
similarities with the old Help to Buy mortgage guarantee scheme which closed to
new applicants back in 2017.
The new scheme opened for
applications this month (April) and is set to run until the end of 2022. It
will mean those on the ground, including conveyancers and estate agents, face
yet more pressure whilst already dealing with a bottleneck of transactions
hoping to be completed before the extended stamp duty holiday deadline of the
end of June.
‘If you thought that the 2020 property
market was hot, add in a further stamp duty extension, low interest rates and
now, a Government backed, deposit subsidised mortgage scheme and you can expect
the temperature to rise even further in 2021,’ says Ged McPartlin, Managing
Director of Ascend Properties.
‘It’s great news for homeowners
and those that believe that the economy, as it recovers from the pandemic,
needs a strong housing market to help lift it out of purgatory.’
Meanwhile others struck a note
of caution. Islay Robinson, CEO of mortgage brokers, Enness Global Mortgages,
said: ‘Converting Generation Rent to Generation Buy is a noble initiative but
not if it comes at the expense of wider market health.
‘95% mortgage products in any
shape or form take the market into pretty overheated, dangerous territory and
we’ve previously seen the results of this kind of precarious lending to those
who aren’t really in the financial position to commit to it.’
Whatever challenges the months
ahead pose in terms of the volume of property transactions you are juggling,
rest assured that Thames Water Property Searches are here to provide a
comprehensive, reliable and efficient service that will ensure all your
property search needs are well taken care of.