Plans unveiled for a 99% mortgage

Chancellor Jeremy Hunt has laid out plans for a 99% mortgage scheme for first-time buyers. He claims it should prove particularly helpful for younger aspiring homeowners who have been finding it increasingly difficult to get onto the housing ladder over recent years.

Will this help more people onto the housing ladder?

Under Hunt’s scheme, first-time buyers will only need to put a 1% deposit, and the government will act as a loan backer.

Prime Minister Rishi Sunak said in a recent article in the Times that he “understand[s] people’s anger when that dream [of home ownership] feels too far away for too many, especially the younger generation”.

In 2021, the government introduced a 95% loan-to-value mortgage scheme, which officials say has helped close to 40,000 homebuyers.

But experts have warned the new scheme increases the risk of more homeowners falling into negative equity - where the value of a property falls below the outstanding debt secured on it.

They also said plans for a 99% mortgage wouldn’t address the affordability of mortgages themselves, high house prices which have risen by 60% in the past ten years, or the lack of housebuilding in the UK.

The figures

With a 99% mortgage, buyers would only have to put up a £2,850 deposit for a home worth £285,000 - the average price across the UK.

In comparison, they'd have to find £14,250 for a 95% mortgage, or £28,500 for a 90% mortgage.