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Mortgage guarantee scheme

Journalist: Anna Sagar, Mortgage Solutions / Specialist Lending Solutions

ended 25. August 2023

Interested to speak to brokers about the Mortgage Guarantee Scheme.

  • What are the pros and cons of the scheme?
  • Have you done many cases through the Mortgage Guarantee Scheme? Has it helped borrowers who may have struggled if the scheme was not in place? 
  • Was it right to extend it last year and do you think it will be extended again? 
  • If you could create a government scheme what would it be? 

2 responses from the Newspage community

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Stephen Perkins
Managing Director at Yellow Brick Mortgages
The scheme was great when it came in, as at the time lenders needed a minimum of 10% deposit, so this re-opened the 95% lending market with lenders feeling covered by the government. However, shortly afterwards lenders released 95% LTV standard mortgages not using the mortgage guarantee and now not many of those on the market utilise it. So whilst extending it avoided lender panic from any announced removal of it, I don't feel the scheme is of any great value at present, due to the options available at 95% LTV currently. I believe a good scheme would be similar to Help to Buy but on any property for first-time buyers only to help more people afford to get on the housing ladder.
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James Bull
Mortgage Broker at JB Mortgages
As soon as there is any turbulence in the financial markets the first product that mortgage lenders withdraw is from the high loan-to-value range. The mortgage guarantee scheme was essential so that lenders have the confidence to offer products for people with smaller deposits. The government was correct to extend this scheme last as market conditions meant lenders were once again withdrawing products and the scheme paused this. However now things seem to be a bit more stable, there does not seem to be any current need to extend this scheme again. It can always be held in the background until it is needed, which it inevitably will in the future as we lurch from one financial crisis to the next.