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5% Mortgage Guarantee Confirmed


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Budget 2021: Mortgage guarantee to help buyers with 5% deposit

A new mortgage guarantee scheme to help people with small deposits get on the property ladder is set to be announced at next week's Budget.

The government will offer incentives to lenders, bringing back 95% mortgages which have "virtually disappeared" during the pandemic, the Treasury said.

The new scheme is not restricted to first-time buyers or new-build homes, but there will be a £600,000 limit.

Boris Johnson said he wants "generation rent" to become "generation buy".

The prime minister added: "Young people shouldn't feel excluded from the chance of owning their own home and now it will be easier than ever to get onto the property ladder."

Chancellor Rishi Sunak - who will unveil the scheme in a Commons speech on Wednesday - added: "Owning a home is a dream for millions and we want to help as many people as possible."

The coronavirus pandemic has meant there are few low-deposit mortgages available, the Treasury said, with just eight on the market in January.

Low-deposit mortgages are often seen as riskier by banks as they are more vulnerable to negative changes in property prices - meaning people hold more debt than their home is worth.

Under the new scheme, which will launch across the UK in April, the government will offer to take on some of this risk.

Lenders will be given the option to purchase a government guarantee that will compensate them for a portion of their losses in the event a buyer cannot keep up with mortgage payments, the Treasury said.

Mortgages with fixed rates for at least five years will also be offered.

The latest scheme is based on the Help to Buy mortgage guarantee scheme, which was introduced under David Cameron's government in 2013 and closed to new loans at the end of 2016.

The Treasury said that policy "reinvigorated the market for high loan-to-value lending after the 2008 financial crisis" and enabled 100,000 households to buy a property across the UK.

Of these, 80% were purchases by first-time buyers, statistics showed. But housing charity Shelter said the scheme increased house prices by 1.4%.

The Help to Buy mortgage guarantee scheme was distinct from the Help to Buy equity loan scheme that still allows first-time buyers in England to take out a government loan to put towards the cost of buying a newly-built home.

The price of a typical UK home has surpassed £250,000 for the first time in recent months, according to the Halifax.

The new scheme could coincide with the end of a stamp duty holiday in England and Northern Ireland, which is due to end on 31 March, though this may yet be extended.

'Stop, start'

Labour has criticised the government for a "stop, start" approach to support measures during the pandemic.

Shadow chancellor Anneliese Dodds told the Times that the Conservatives' approach to furlough and other economic support measures showed "a failure of confidence" and had "led to greater negative economic impact", resulting in job losses.

Meanwhile, Mr Sunak said he will use the Budget to level with the British people about the state of the economy in the wake of the coronavirus crisis.

Explaining the government's economic response to the pandemic, Mr Sunak told the Financial Times: "We went big, we went early, but there is more to come and there will be more to come in the Budget. But there is a challenge [in the public finances] and I want to level with people about the challenge."

He added: "I will do whatever it takes to protect the British people through this crisis and I remain committed to that."

Next week's announcement is also expected to include a new £100m taskforce to crack down on fraudsters who have exploited support schemes, such as furlough.

Tax officials have opened about 10,000 inquiries into suspected fraudulent activity, the government said.

Elsewhere, a £126m boost for traineeships in England will also be announced on Wednesday.

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Least surprising news of the day, anything to keep the Ponzi propped up.

And as for the supposed inquiries into support scheme fraud, forget about it, ukgov are quite happy for all Rishi's free covid handouts to just be a form of helicopter money, they really don't care whether it was obtained fraudulently or how it was spent.

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On 06/02/2021 at 03:22, rantnrave said:

Each budget usually has a headline grabber, saved until the end of the speech. The relative silence on the Stamp Duty extension and Boris' 95% mortgages gives me concern that these will be the 'hurrah' moments we are supposed to be thankful for come Budget Day.

I saw this coming weeks ago

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I don’t get why they don’t try and clamp down on speculation and landlords if their real aim was to create home-owners they would reduce the demand for already home-owners, and increase the purchasing power of non-home owners. 

but we all know it’s actually about just pumping up demand from all sides, not dealing with ‘bad demand’ and not dealing with supply. 

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I am buying a house today. This underpins the entire Ponzi scheme and guarantees a new generation of gullible debt slaves will be buying in their droves over the summer.

If you can’t beat them, then join them. I am literally going to buy a house today. 

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Even though I'm not directly affected by this as I'm a homeowner, it still makes me feel sick to my core. 

I will, obviously, be affected indirectly, in the form of higher taxes and the fact that it will make it harder, not easier, for my young child to buy a house in the coming years.

Right, that's it, I'm stopping all non-essential spending and maxing out my pension contributions and anything else that legally lowers my tax burden, with the aim of retiring way sooner than I normally would (I'm probably 60% of the way to that goal anyway). F**k 'the politicians of all colours, they can all burn in hell. 

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https://news.sky.com/story/rishi-sunak-uk-economy-to-face-enormous-strains-following-lockdown-12230212

"Mr Sunak said: "We now have far more debt than we used to and because interest rates... at least a month or two ago were exceptionally low, that means we remain exposed to changes in those rates."

"These include a £126m boost for traineeships and a mortgage guarantee scheme aimed at helping aspiring homeowners with small deposits onto the property ladder."

??????

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3 minutes ago, Trump Invective said:

This won't change anything. We knew it was coming, to avoid the cliff edge, but we are talking minimal effect these days, the market is already pumped to the max. Deposit, sure, what about the wages needed to get the mortgage?

Isn't there a campaign slash rumour to relax the boe lending rules? 

Going from 4.5x times to 5.5x would be a 20% salary boost effectively etc

Now hmrc has secured some of the debt the risk has shifted for the bank anyway

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Just now, captainb said:

Isn't there a campaign slash rumour to relax the boe lending rules? 

Going from 4.5x times to 5.5x would be a 20% salary boost effectively etc

Now hmrc has secured some of the debt the risk has shifted for the bank anyway

There is, but so far it looks unlikely to succeed.

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25 minutes ago, Si1 said:

It sounds near identical to the HTB mortgage guarantee scheme. That covered 15% of the mortgage. I wouldn't be surprised if this is the same.

But you had to start paying that back after 5 years. 

And that kind of killed it.

I can't see any such scheme working in practice, for these reasons: 

1. Tsunami of unemployed. 

2. Whole generation learnt value of less debt during covid. 

3. Bond markets threatening to force interest rates up. 

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1 minute ago, 24gray24 said:

But you had to start paying that back after 5 years. 

And that kind of killed it.

I can't see any such scheme working in practice, for these reasons: 

1. Tsunami of unemployed. 

2. Whole generation learnt value of less debt during covid. 

3. Bond markets threatening to force interest rates up. 

No it's not the same as the equity loan scheme. It's a totally different thing.

The mortgage guarantee scheme ended in 2016. The equity loan scheme is still going.

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Not sure why but I'm pretty relaxed about this, partly because it was obviously going to happen, johnson mentioned it months ago. All it says is there is real panic. Those who have lost out in the last year won't be in a position to "benefit" from this, and the middle/rich have their deposit or equity. 

 

It's a sentiment boosting attempt, but how much more can sentiment be boosted, after everyone went nuts for houses last year? It's also an attempt to prop up the ponzi of course, but nobody at the ftb end has the borrowing capability.

It will be announced with a fanfare, and will drop like a lead balloon after a 24hr news cycle

 

Edited by Trump Invective
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55 minutes ago, dpg50000 said:

Even though I'm not directly affected by this as I'm a homeowner, it still makes me feel sick to my core. 

I will, obviously, be affected indirectly, in the form of higher taxes and the fact that it will make it harder, not easier, for my young child to buy a house in the coming years.

Right, that's it, I'm stopping all non-essential spending and maxing out my pension contributions and anything else that legally lowers my tax burden, with the aim of retiring way sooner than I normally would (I'm probably 60% of the way to that goal anyway). F**k 'the politicians of all colours, they can all burn in hell. 

Yep. They are the scum of the earth. All of them...except maybe Jacinda Ardern.

Edited by HovelinHove
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Just now, HovelinHove said:

I do agree. They will do anything. They are filthy scum.

Whatever the results of this surely this is a major vote loser. We have record unemployment. Children are missing education and going hungry. The tory party's answer? Let's spunk precious taxpayer's money on boosting house prices. Yeah that'll feed the starving.

I hope that Trump Invective is right. Even if he is then this clear intent from the govt is evil of the most cynical kind.

It's a 'let them eat cake' moment.

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