Millions of people hoping to get onto the housing ladder in the UK may be buying a house quicker than they expect as the Prime Minister announces a brand new scheme.
Boris Johnson wants to turn ‘Generation Rent’ into ‘Generation Buy’ as he promises to boost the availability of ‘long term’ mortgages for borrowers with a five percent deposit.
This comes after the Prime Minister gave a speech to the virtual Conservative Party stating that around two million people who could afford repayments cannot currently get home loans.
He said: “We need now to take forward one of the key proposals of our manifesto of 2019: giving young, first time buyers the chance to take out a long term, fixed rate mortgage of up to 95 per cent of the value of the home – vastly reducing the size of the deposit.
“We believe that this policy could create two million more owner-occupiers – the biggest expansion of home ownership since the 1980s.
“We will help turn generation rent into generation buy.”
At the moment there are no further details on how this scheme will work or when it is to be launched, however, experts have said the plan may cost tens of billions of pounds.
Mr Johnson also said that the party needed to ‘fix our broken housing market’ to help young people back onto the property ladder.
Those who want to borrow with only a five percent deposit have been able to do so in recent years. However, since the pandemic, lenders have pulled out of these deals.
For borrowers who have a 10 percent deposit, there are few lenders and funds are limited.
This means that currently first time buyers are struggling to buy a house without putting down at least a 15 percent deposit.
First time buyers have also had the hurdle of rising house prices in recent years with prices rising dramatically recently because of pent up demand and the stamp duty holiday.
The criteria of the affordability tests that current borrowers have to go through could potentially be relaxed under the Prime Ministers new plan, however no final plans have been confirmed.