Government to introduce 95% LTV mortgage scheme without stress tests
Boris Johnson is looking to launch a 95% mortgage scheme where normal stress test rules don’t apply.
Reportedly the scheme would introduce “a form of state guarantee” to lenders to lower the risk of the loans.
The Prime Minister spoke to The Telegraph before the Conservative party’s virtual conference this weekend.
Johnson said: “I think a huge, huge number of people feel totally excluded from capitalism, from the idea of home ownership, which is so vital for our society. And we’re going to fix that – ‘Generation Buy’ is what we’re going for.
“We need mortgages that will help people really get on the housing ladder even if they have only a very small amount to pay by way of deposit, the 95% mortgages.
“I think it could be absolutely revolutionary, particularly for young people.”
There has been a lack of high LTV mortgages available since the pandemic.
Nisha Vaidya of Bankrate UK, responded: “It’s a particularly tough time for first-time buyers at the moment, so government efforts to support them are certainly welcome.
“Although the withdrawal of low deposit mortgage deals from the market is undoubtedly part of the problem, it’s also clear that soaring house prices have prevented many first time buyers from getting on the property ladder.
“Any plans to reform the mortgage market need to be combined with a renewed focus on increasing the supply of affordable housing that young people can access.
“Positively, last month the government announced the Affordable Housing Programme (AHP) which is intended to fund up to 180,000 homes between 2021 and 2026.”