No announcement. No press release. But one of the government’s most significant housing market interventions is here to stay.
Buried on page 32 of the Chancellor’s latest Spending Review, the Mortgage Guarantee Scheme – originally introduced as a temporary pandemic recovery measure – is being made permanent, in a move that could reshape lending to low-deposit buyers for years to come.
The confirmation came without fanfare or detail, catching even seasoned mortgage professionals off guard. Yet its implications are far-reaching.
Sarah Thompson, managing director of Mortgage Scout, part of the Leaders Romans Group, says that the lack of visibility around the policy shift was “surprising, given the scale of its impact.”
NO FORMAL ANNOUNCEMENT
She adds: “It was easy to miss, but the Spending Review quietly confirmed that the Mortgage Guarantee Scheme will be made permanent.
“There was no formal announcement and no further details, and with the current scheme ending on 30 June, buyers are left waiting until July to understand exactly what will change.”
First introduced in 2021 to stimulate homebuying after lockdown, the scheme provides a government guarantee on the portion of a mortgage between 80% and 95% loan-to-value, incentivising lenders to offer 95% LTV mortgages to borrowers with just a 5% deposit.
The move to extend it permanently signals a political commitment to helping younger and lower-income renters onto the housing ladder.
The move to extend it permanently signals a political commitment to helping younger and lower-income renters onto the housing ladder – though critics point out the current version excludes new-build properties, a key segment for first-time buyers.
Thompon says: “With high rents and rising living costs making it harder to save, this kind of support is critical for those trying to move from renting to owning.
“But if the government wants to improve access, it should look at widening the scope of the scheme and making it more inclusive.”
MISSED OPPORTUNITY
With housing affordability set to dominate the next election cycle, the government’s decision to embed the scheme permanently could provide a long-term tool for tackling deposit barriers, particularly as mortgage rates begin to stabilise.
But the lack of transparency around the policy shift has raised questions about delivery.
Thompson says: “Although mortgage rates are now starting to fall, the size of the deposit remains the biggest challenge for most buyers.
“A permanent guarantee scheme could bring much-needed consistency to the market and give both lenders and borrowers greater confidence.”
