Chancellor Jeremey Hunt is reportedly preparing to unveil a scheme through which prospective buyers are able to get on the housing ladder with a 1% deposit.
According to Financial Times-cited sources, the chancellor is set to unveil the publicly-backed 99% mortgage scheme for first-time buyers in the spring budget.
This would mark an increased effort to encourage buyers back onto the market by Prime Minister Rishi Sunak’s cabinet, while aiming to entice younger voters ahead of the next election.
Loans of up to 99% would be offered to first-time buyers and backed by the government, per the Financial Times piece, taking incentives a step further than the Help to Buy scheme.
Help to Buy, which required buyers to lay down a 5% deposit on their first homes, expired in March last year.
The move could indeed “reinvigorate the first-time buyer market,” according to ASK Partners chief executive Daniel Austin, “consequently driving more turnover of properties higher up the chain”.
“With rental prices so high, it can be hard to save for a meaningful deposit but those managing the rents would find it easier to make monthly mortgage payments,” he said.
However, Moor Mortgages advisor Peter Stamford was less optimistic, previously arguing such a move could drive up prices and cause the housing market to “overheat”.
“It’s a high-stakes gamble and could potentially fuel yet another house price bubble,” he said.
Hunt is due to deliver the spring budget on March 6, with a general election widely expected this coming autumn.