07 February 2024
If you are covering the latest mortgage guarantee statistics, please see the following comment from Karen Noye, mortgage expert at Quilter:
"Since its launch in April 2021, the Mortgage Guarantee Scheme has seen a total of 41,052 mortgage completions up until September 2023 representing just 1.6% of all UK residential mortgage completions during that period. Despite its low take up, for those that have used it, it has been a lifeline. However, when we dive into the numbers, the average property purchased through the scheme is valued at £201,313, noticeably below the UK average house price of £291,000. This clearly shows the scheme's focus on the more affordable segment of the housing market, with three-quarters of the properties bought valued at £250,000 or less.
"The scheme primarily attracts individuals and families with household incomes of £50,000 or less, underlining its appeal to those aiming to step onto the property ladder without hefty financial backing. But, there's a significant hurdle: the borrowing limit, typically capped at 4.5 times one's annual income. For many earning an average salary, this means they can borrow just a bit over £150,000, significantly limiting their choices in a tight housing market.
"The government's decision at the Autumn Statement to extend the scheme until June 2025 provides ongoing support but doesn't necessarily change the game for prospective homeowners. It's a helpful measure, yet it stops short of addressing the broader issues of affordability and access in the housing market. The concern over negative equity, especially for purchases at peak prices, adds another layer of caution for participants. Therefore, rumours of the government introducing 99% mortgages during the budget seem unlikely in this unpredictable housing market. However, house prices according to most indices have been climbing so the government may feel vindicated to bring this type of mortgage back.
"Regionally, the scheme's uptake varies, with Scotland showing a particularly high level of engagement. This highlights how the scheme's impact is not uniform across the UK, reflecting regional differences in housing markets and needs."
