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Prime Minister’s first-time buyer mortgage pledge is welcome but ‘needs more detail’

Prime Minister’s first-time buyer mortgage pledge is welcome but ‘needs more detail’

Parkers has welcomed Prime Minister Boris Johnson’s pledge to boost the high loan-to-value (LTV) mortgage market, giving first-time buyers more of a chance to buy their own home.

 

In a speech to the virtual Conservative Party conference this week, Mr Johnson said more 95% mortgage products were needed to help young buyers get a foot on the property ladder.

 

He added: “We need now to take forward one of the key proposals of our manifesto of 2019: giving young, first-time buyers the chance to take out a long-term, fixed-rate mortgage of up to 95% of the value of the home - vastly reducing the size of the deposit and giving the chance of home ownership - and all the joy and pride that goes with it - to millions that feel excluded.

 

"We believe that this policy could create two million more owner-occupiers - the biggest expansion of home ownership since the 1980s.

 

"We will help turn generation rent into generation buy."

 

A huge number of high LTV products were withdrawn by lenders following the easing of the Covid-19 lockdown, leaving very few options for first-time buyers with low deposits.

 

Liz Syms from Connect Mortgages, Parkers’ preferred mortgage partner, said: “Since the lockdown, there has been a clear lack of high LTV mortgage products restricting the options for first-time buyers.

 

“The market has relied on lenders issuing limited tranches of products or offerings that involve family guarantees. Insurance-backed schemes that were intimated in the speech are not new.

 

“Those who have been in the mortgage market for some time will remember 'indemnity insurance' which provided security for lenders against the risk of default when offering a high LTV, but the applicants had to pay the cost of the insurance.

 

“Any initiatives that enable lenders to become comfortable again lending up to 95% will be very welcome, but we look forward to seeing the detail!”