The number of 95% loan-to-value (LTV) mortgages has increased significantly in recent weeks. Lawrence Henry, a partner at Statons, said: “We saw the impact of this policy change immediately, the certainty that a mortgage is available has meant that demand from buyers has increased every month and we are confident that this will continue for the next twelve months and beyond.”

This policy has addressed a critical issue in the housing market, and has suggested it will keep the residential market active after the withdrawal of the stamp duty holiday on 30th June.

The Help to Buy scheme only supports first-time buyers buying a new home. To keep the housing market alive buyers, need to be able to buy ‘second hand’ housing. Families moving to larger homes and retirees downsizing all need buyers. Anyone buying a family home can apply for a 95% mortgage, but it is first time buyers who are expected to be the major beneficiaries of the Governments guarantee scheme due to the well detailed problems of saving for a deposit while paying rent.

The ability to access a 95% mortgage almost completely disappeared in 2020. The government’s scheme, which provides a guarantee for up to 15% of a loan, was designed to increase the number of mortgage providers in this market and has already had a positive impact, the number of 95% mortgages has increased from just three a couple of months ago to over 60 today!!

Interest rates are settling at just under 4%, with rates fixed for up to five years. Whilst these rates are higher than those available to buyers with a larger deposit, fixing the rate for five years does allow buyers to budget for confidence over this period, and for many buyers the mortgage repayments remain lower than the rent they are currently paying.