06 October 2020

Government announces 5% deposit mortgages


Prime Minister Johnson announces 5% deposit mortgages to help first time buyers.

Boris Johnson has revealed that the government will bring forward proposals to introduce fixed-rate long-term mortgages to enable first-time buyers to purchase homes via 95% LTV (Loan to Value) mortgages.

The Prime Minister claimed that the initiative would add two million owner-occupiers to the housing market and fulfil one of the Conservative party key 2019 election manifesto promises.

He said during his speech to the Conservative’s virtual national conference: 
“For most people it is still true that the overwhelming instinct is to buy.

But for many of them they simply can’t, not because they can’t afford the mortgage but because they can’t afford the deposit.

“The disgraceful truth is that home ownership levels in this country have plummeted and that many are forced to pay through the nose to rent a home they can’t truly love or make their own.  This policy will create two million more owner occupiers – the biggest expansion since the 1980s of home ownership, to every part of the country.”


Mark Hayward, Chief Executive, NAEA Propertymark (The Estate Agents Trade Body) commented:

“We welcome the Prime Minister’s comments today which shows a positive change in tone by promoting a generation of renters to become a generation of buyers. We encourage lenders to come on board and support this initiative to enable first time buyers to enter the property market by future proofing the financial burden many face.”

“We want to see intent become action quickly so that first time buyers can make the most of the current stamp duty holiday and continue to stimulate the housing market.”

There is no doubt that the restriction of high LTV mortgages for First Time Buyers over the last few months has prevented people from entering the property market, as well as having the effect of slowing down transactions due to lengthy mortgage approvals.

Of course people have to be sensible in their financial commitments especially in a world where property prices are dependent on the post-pandemic economy, but housing has always proved a good long term investment. And at least interest rates are VERY low unlike the times some of us can remember in the 80’s and 90’s.

At the end of the day it is the mortgage lenders that will determine if this is implemented or not. Unless the government intends to enter the mortgage lending market.

Many young people renting are paying more in rent than they would in mortgage repayments, so it can only be attractive to them.

Unfortunately if home buyers become unemployed, the Department for Work and Pensions only pays for rent and not mortgage payments.

I'm here to help sellers, buyers, landlords, and tenants.

Call me or drop me a message if you think I might be able to help you.


The Good Estate Agent – North Nottinghamshire
Tel: 01777 237310 or 07981 744003



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