In a significant move aimed at supporting aspiring homeowners across the country, the Treasury has confirmed that the Mortgage Guarantee Scheme will now be made permanent. Originally introduced in April 2021 as a temporary measure to help more people get onto the property ladder, the scheme has proven successful in encouraging lenders to offer mortgages with just a 5 percent deposit. The decision to make it a permanent fixture in the UK’s housing market signals a long-term commitment by the government to improve homeownership accessibility, particularly for first-time buyers who often face significant challenges saving for a large deposit.
The Mortgage Guarantee Scheme works by providing lenders with a government-backed guarantee on the portion of the loan above 80 percent of the property’s value. This reduces the financial risk to the lender and gives them the confidence to offer high loan-to-value mortgages, including those at 95 percent. Since its launch, the scheme has supported tens of thousands of buyers, many of whom might otherwise have been unable to purchase a home due to the substantial upfront costs typically required. The permanence of the scheme is expected to encourage more consistent lending practices in this segment of the market, which in turn should stimulate broader demand and bring increased stability to the housing sector.
By embedding the scheme into the housing finance landscape, the government aims to help not only first-time buyers but also existing homeowners looking to move up the property ladder without needing to amass a large deposit. It is also seen as part of a wider strategy to support economic growth through a vibrant housing market and increased construction activity. The policy could also act as a counterbalance to recent affordability concerns driven by rising interest rates and high property prices, offering a tangible pathway to ownership for those with limited savings but sufficient income to service a mortgage.
Critics, however, argue that while the scheme increases access to borrowing, it may inadvertently contribute to higher house prices if supply does not keep pace with demand. There are also concerns about the long-term risks to borrowers who take on large mortgages with small deposits, especially in the event of a housing market downturn. Nonetheless, ministers remain confident that the safeguards in place and the design of the guarantee offer a measured and responsible way to support buyers without distorting the market.
The permanence of the Mortgage Guarantee Scheme reflects a broader political and economic objective to increase homeownership rates and reduce the barriers many face in securing a mortgage. For prospective buyers across the country, particularly younger generations and those without family wealth to rely on, the announcement is a welcome reassurance that government support will remain available indefinitely. As the housing landscape continues to evolve, this move marks a clear signal of intent that boosting homeownership remains a central priority of UK economic and social policy.