1% mortgages

In order for a scheme like this to succeed, which may help thousands more onto the property ladder, there are so many other factors that need to be addressed, such as the lack of housing stock. In general, we should embrace all schemes that help first-time buyers to become homeowners, but it won't be the silver bullet unless more houses are built. Otherwise it could simply push prices up even further, leaving many further away from ownership than ever before.

One of the biggest issue we see as brokers is first time buyers unable to make the leap onto the ladder because they don't have enough deposit. Rents are constantly rising along with the cost of living, so buyers being able to save a large amount on a regular basis is not something we see very often. So with this in mind, the 99% mortgage idea could be exactly what is needed. But we must be mindful that a scheme like this would definitely increase the amount of purchases taking place, which could push house prices up even further. It is very difficult to bring forward a solution to help more buyers onto the ladder without causing too much demand. Whilst this may be seen as a ploy to gather more votes from those yearning to obtain their first property. It will be interesting to see whether this could materialise into something that helps a lot of people currently stuck renting. Rates won't be as high as most would expect, as it will still need to be affordable.

While initiatives targeting first-time buyers are appreciated, it's crucial to recognise that, regardless of government guarantees, interest rates for 1% deposit mortgages will likely be at the higher end. Coupled with stringent underwriting and credit profiling, this product - if it ever appears - may only therefore prove beneficial to the select few rather than the many.

The pressing demand for housing, coupled with a chronic undersupply of suitable properties across the UK, means that schemes like this could - in fact -inadvertently drive up house prices, intensify competition, and, despite the seemingly low deposit, place homeownership even further out of reach for many.

In Scotland, where mortgage loan-to-values are often based on Home Report values that are routinely surpassed by purchase prices, the average deposit required will still sadly remain prohibitive for a significant portion of potential Scottish first-time buyers.

I think this initiative is likely to cause higher house prices and act like a fix for the symptom of the crisis facing first-time buyers instead of looking at the cause.

These mortgages are likely to have some of the highest interest rates as it will be a specialist scheme and still risky for the lender.

This scheme will help with the need for a deposit but the issue will be the amount of borrowing that can be achieved and then the monthly costs.

Overall I think this initiative is unlikely to help very many and is more likely to add to house prices increases.

1% deposit mortgages are reported to be the newest carrot the Conservative Government's is dangling in front of 'Generation Rent' voters, ahead of a general election. This drastic approach to helping borrowers clear the substantial hurdles to homeownership will sound incredible to those struggling to find a larger deposit. However the governement and the property market needs to look before it leaps as there are clear risks of causing another housing bubble.

This announcement from Rishi absolutely stinks of desperation to try to reduce the humiliation he’s facing in the next election. We’ve seen similar knee-jerk schemes in the past from him such as the Stamp Duty holiday which caused unnecessary panic and false demand. A short time government with short term planning.

A great headline for generation rent, but little more than a plaster over a gaping wound in the housing market that we've had years of missed house building targets, which has overinflated house prices.
Coupled with the rumoured tax cuts this weekend, a year of desperate attempts to win votes from a government that knows their time in power is more than likely up at the next election.

This is a desperate move by Rishi Sunak to win votes in the general election. Another ill thought-out idea by the Conservatives, its a receipe for disaster and will only inflate house prices.

I believe the offering of 1% .Mortgages will definitely help first time buyers, particularly those within areas of high property prices. That being said it will come eith the disadvantage of seeing higher interest rates, the possibility of becoming a mortgage prisoner should values decrease even marginally. Rate wise I would anticipate between the 6% and 7% price point depending of course which lenders partake in the scheme. Rather than offering a sticky plaster of 1% mortgages the Government should focus on actually delivering on its pledge to deliver affordable housing in volume..

Instead of proposing this risky move, the government should focus on reducing or even better aboloshing stamp duty. This would help first time buyers and not cause risk to lenders.

I suspect most lenders would be cautious with a 1% deposit as there is more chance of negative equity and mortgage prisoners. Therefore, the rates would be significantly higher. This would impact customers more at this level as you would expect that they would be buying at a higher level than they could currently.

Engaging and working with the mortgage industry is a good first step, and at a high level 1% deposit mortgages would be welcome by first time buyers. However devil is in the detail, rates are likely to be much higher to reflect the increased risk for lenders, thus impacting affordability. It is important the 1% deposit mortgages are truly attainable for consumers, and not just a headline grabber. Careful thought needs to be put into the scheme, this ensures that whilst helping first time buyers, it does not artifically inflate prices. Decent intiative, but much work to be done to execute correctly.

No, no, no. 1% deposit mortgages when house prices are falling. What could possibly go wrong? Well, other than being trapped in negative equity and paying thousands of pounds more in interest over the decades, presumably on an even longer mortgage term to pay for the 99% borrowing. It beggars belief that this government would even countenance this idea for a second. It's nothing more than a shameless, cynical attempt to win Generation Rent's vote.

The intractable problems of the UK property market need innovation and a 99% mortgage is certainly that. A low barrier to entry that will be within reach of many first time buyers, along with the clear and pyscologically important advantange over a 100% mortgage that the buyer owns at least part of the property on day one.

I would imagine this could lead to even more people being over leveraged and an even worse debt crisis in the future. Having a deposit and the effort of saving is a lesson in itself. Home ownership is a privilege not a right.

The 1% deposit mortgage will sound great to many borrowers, but due to the mechanisms put in place to protect the market after the financial crash, there are various issues behind the scenes that need to be addressed if it's going to work. The main on is capital usage; lenders are required by the regulators to hold more capital per mortgage pound issued on higher risk loans, this means that lenders cannot do huge volumes on these types of applications and have to charge a considerable interest rate to make a return on the capital deployed. One solution would be to revisit the regulation, but then we risk creating the same "risk bubble" that brought down Northern Rock, so I cannot see that being an option. Another would be for the Treasury to underwrite part of the risk; however when they did this with 5% deposit mortgages the cost of the guarentee payable by the lender was seen as too high. So, it's sucess or failure will be down to the details of the backgorund mechanics depolyed.

The housing market is intertwined with the whole outlook of British people. When the housing market is doing well then everything tends to do well due to the feelgood factor. Plus many tens of thousands of peoples livelyhoods are linked to property and housing. Anything the government can do to make it easier for people to get on the property ladder has to be welcomed. I think mortgages with a 1% deposit is a great idea, but if 1% deposit mortgages are offered, why not just go the full hog and offer 0% deposit mortgages. Affordability checks are as stringent as they have ever been so if someone can afford the payments then why not !

Ask yourself this. How is a normal family paying an obscene amount on rent and the cost of living these days supposed to save a 5% deposit? The reality is that it's a huge ask so I'd applaud this move. That being said, it's just a sticking plaster if we don't get to grips in this country of providing enough houses to go round in the first place.

A product long overdue for hard working, typically younger aged people seeking to break out of the rental trap. With average monthly rent greater than £1,000 excluding London it is no wonder that many struggle to fund a deposit for a mortgage. This is expecially so for those who dare to attempt to start a family at the same time.
The reality check though will be that lenders will seek to profit from these products so expect them to carry a significant risk premium. In the past this has been in the region of 2-3% above normal lending rates. At least for an initial period.
Undoubtably this will have a short term inflationary effect on a stagnant housing market. It will further highlight the shortfall in affordable housing supply for first time buyers and increase pressures to build. However these are old issues and should not be allowed to further restrict a large section of British society from becoming home owners.

well... cant blame them for trying! Lets hope negative equity isnt a probllem in the next few years! It could mean that mortgage lenders are unable to remortgage. If though, brokers make sure clients are placed with lenders who can carry out full PT's, this would help to cut some risk away. Its not ideal, but for 99% and 100% mortgages, you cant just hope for the best, you need to plan ahead. I can expect that lenders will have extremely tight margins for these products and possibly even only a handfull will consider it.