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Mortgage guarantee scheme

Journalist: Anna Sagar, Mortgage Solutions / Specialist Lending Solutions

ended 15. December 2022

Looking to speak to mortgage brokers about the Mortgage Guarantee Scheme, which closes for new applications from 31 December 2022. 

  1. Have you submitted any applications under the scheme? What has the experience been like? 
  2. How effective has it been? Would you recommend it to customers? 
  3. Do you think the government should extend it?  

3 responses from the Newspage community

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Mike Staton
Director at Staton Mortgages
The mortgage guarantee scheme is a great scheme, giving lenders assurances to lend to borrowers with only 5% deposits. Having submitted many of these myself, I think they are becoming more relevant now as uncertainty surrounds house prices. When this ends, we will have seen two major schemes go for first-time buyers this year. At a time when first-time buyers are being made to jump through more hoops than a dolphin at sea world, we need to see schemes introduced and not revoked.
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Gary Boakes
Director at Verve Financial
With the majority of lenders previously offering higher LTV lending, the mortgage guarantee scheme ended up blending into all the other products and truth be known you probably didn't even realise the difference when submitting. Its main goal was always to get other lenders to offer 95% LTV mortgages and with lenders starting to pull 2-year fixed rates at 95% it probably feels like the wrong time to end the scheme and would be worth extending to drive purchase activity among first-time buyers.
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Matthew Jackson
Director at Mint FS
It served its purpose as it gave confidence to lenders to return to lending at higher loan to values. But in truth once they returned, only a small number of lenders actually used the scheme and typically it was the ones outside of the scheme who offered the most competitive rates at 95%, like HSBC for example. Instead of extending it, I would prefer the government look to spend the money this scheme costs on something more relevant to the current market such as a similar scheme to reduce the stress test rates used for landlords' buy-to-let remortgages. This would ensure that rental properties are not disposed of at a time when the demand for rental homes is increasing.