Speaking at the virtual Conservative conference in October, Boris Johnson pledged to help young, first-time buyers get a long-term fixed-rate mortgage worth up to 95% of the home’s value.
We’re taking a closer look at what this pledge means for young people hoping to move into the housing market.
What are the government offering?
- Long-term fixed-rate mortgage worth up to 95% of the home’s value:
- A long-term fixed-rate mortgage refers to a mortgage that’s tied up with a fixed interest rate for five or more years. This will give first-time buyers reassurance that their mortgage will remain consistent and affordable even with the uncertainty of the UK economy.
- Another benefit of this type of mortgage is that it’s not covered by the mortgage affordability rules, meaning there’s no stress-testing on borrowers.
- Vast reduction of the size of mortgage deposits: In his speech, Boris Johnson acknowledged that while many people would like to buy they simply can’t afford the deposit. Therefore, the second part of the government pledge is to vastly reduce the size of mortgage deposits to a more manageable 5%.
This proposal was first mentioned in the Tory party’s manifesto in 2019 and was part of their pledge to “turn Generation Rent into Generation Buy”.
Boris Johnson said: “The disgraceful truth is that levels of owner occupation for the under 40s have plummeted in this country and millions of people are forced to pay through the nose for a home they can’t truly love or make their own.”
It’s believed the policy could create ‘2 million more owner occupiers’ which would be the biggest expansion of home ownership since the 1980s.
Assuming the government will deliver on their latest pledge, this is great news for first-time buyers up and down the country.
The government has yet to release specific details on this new scheme, but we will keep you updated on all the latest mortgage news and government help-to-buy-schemes so you can get the most out of the support that’s available.
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BBC news – Conservative conference: Johnson on ‘broken’ housing market – Published Oct 6 2020
The Sun – Generation Buy: What is Boris Johnson’s new 5% deposit mortgage scheme? – Published 6 Oct 2020