The UK housing market faces “overheating” due to the government 99 per cent mortgage idea, according to reports. Experts have warned about a potential “99% mortgages” scheme for first-time buyers that would appeal to young voters before the next election.
The scheme would only require borrowers to put down a 1% deposit towards their first home and has been mulled over by Jeremy Hunt, the Chancellor, and Prime Minister Rishi Sunak ahead of their Spring Statement and Budget in March. “This radical approach to dismantling the towering barriers to home ownership will sound fantastic to those struggling to find a larger deposit,” said Peter Stamford, the founder and lead adviser for Moor Mortgages.
He added that there was “a risk it could once again cause the property market to overheat, driving prices up further. It’s a high-stakes gamble and could potentially fuel yet another house price bubble.” Jonathan Rolande, founder of the National Association of Property Buyers said: “In the short-term it may produce a honeymoon where some young people who could not afford to [before] get on the ladder and are very happy.
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“Giving people money to go out and buy, it means they are all competing with each other for the same limited number of homes, so it will push up prices. In a few years’ time we’re back with the same problems – a shortage of housing.” Labour’s Deputy Leader Angela Rayner said the Tory government had “completely failed to address the supply of affordable homes, or lift a finger to reform our broken planning system which has forced a generation of young people to give up on the dream of home ownership”.
“We still see so many people impacted and stuck on the old Northern Rock mortgages,” said Richard Jennings, the founder and managing director of Richard Jennings Mortgage Services “This scheme would undoubtedly offer protection to lenders, but what plans does it have in place to protect the borrower? A longer-term, sustainable and affordable model needs to be found to ensure future generations can continue to get on the housing ladder,” Jennings added.
The scheme would mean someone buying a house at the average UK house price of £288,000 would need to put down a deposit of £2,880.
