Brokers have lambasted the Government’s mortgage guarantee after the lastest figures revealed that just 6,535 mortgages were completed through the scheme between April and September last year.
The figures come as part of the Government’s second update on uptake of the mortgage guarantee. The first set of figures revealed that only 812 mortgages had been taken out using the scheme.
The scheme had been announced as part of the 2021 Budget with Chancellor Rishi Sunak (pictured) claiming the scheme would support a new generation in realising the dream of homeownership.Â
However, brokers claim the scheme was mired in red tape, burdened by credit worthiness restrictions and suffered from a lack of consumer awareness when compared to the Help to Buy scheme which it ran alongside.
Paul Neal of Derbyshire-based Missing Element Mortgage Services, said: “Many lenders were pretty savvy and brought out their own 95% LTV deals before the Government’s mortgage guarantee scheme was even introduced.
“As ever with Government schemes, it’s a simple case of not enough and too late. Also, the majority of the lenders offering it only made it available to those who had very good credit, which instantly excludes many first-time buyers.”
Rhys Schofield, managing director at Peak Mortgages and Protection, added that lenders were simply quicker than the Government in proving 95% LTV mortgages.
He said: “It’s pretty simple why the numbers are so low. The scheme was floated with much bluster earlier on in the pandemic and by the time it was actually up and running several months later most lenders were offering 5% deals anyway outside the scheme without the government hoops and costs for the lender to jump through.”
Mark Robinson, managing director of Southampton-based Albion Forest Mortgages, agreed: “The number of lenders using the scheme is quite low compared to how many potential lenders are out there. More to the point, we even had 5% deposit mortgages available before the scheme came out.”
Scott Taylor-Barr of Shropshire-based Carl Summers Financial Services, added: “Having spoken to various lenders who chose to “go it alone” and launch 95% LTV deals without the Government mortgage guarantee scheme, it simply came down to cost.
“The Government scheme was too expensive compared to taking the risk on themselves.”
Graham Cox, founder of the Bristol-based Self-Employed Mortgage Hub, concluded: “There are a couple of reasons the Mortgage Guarantee Scheme has been a damp squib.
“Firstly, the main benefit was for lenders, not borrowers. And secondly, it was running alongside the much better known Help to Buy Equity Loan Scheme. Ultimately, borrowers simply weren’t as familiar with it.”
