PLANS for Government backed 99 percent mortgages for first-time buyers have been criticised by a leading property association.
The National Association of Property Buyers (NAPB) believe the policy is a “quick fix” which doesn’t deal with the deepest issues which currently exist in the UK property market.
Spokesman Jonathan Rolande warned: “Government-backed 99% mortgages for first-time buyers are a quick fix for those unable to save a deposit. And they are a quick fix for a Government who have seen the prospect of votes from the young evaporate, thanks to the housing crisis.
“It may prove a popular move. There will be a short time when younger people, still stuck in the family home, or in expensive short term rentals will be able to buy their own home, with all of the benefits that offers.”
But outlining the longer-term concerns the NAPB have, Mr Rolande continued: “Within a very short time, adding so many potential new buyers to the market will inevitably drive up prices, making it even more difficult for buyers to enter the market in a year or so. That’s because, by increasing demand without increasing supply the property market becomes a game of musical chairs – same chairs, more players.
“Successive Governments have failed to get to grips with the crisis caused by increased population and smaller households. Increasing buyer demand has never ended well. By making it easier for one buyer, you make it more difficult for another. There is no time to solve the housing crisis before the election. This policy, if it happens, will make the situation worse.”
Mr Rolande’s warning comes days after details of the policy first emerged.
The scheme is reportedly being considered by the prime minister, Rishi Sunak, and the chancellor, Jeremy Hunt, before the spring budget on 6 March. According to reports it would only require borrowers to put down a 1% deposit towards their first home. If approved, the programme would go even further than the 5% deposit previously required as part of the Help to Buy scheme – which expired at the end of March 2023 – under which the government provided assistance at a time when 95% mortgages were scarce. The government recently extended a separate mortgage guarantee scheme, which incentivises lenders to offer larger mortgages by promising to cover a portion of their losses if customers default and a home is repossessed.