The Chancellor’s Mansion House speech and subsequent commitment to a permanent Government-backed Mortgage Guarantee Scheme of up to 95% loan-to-value (LTV) is a positive step forward, and it would be good to see this extended to higher LTVs in the future.
Although we already insure our own high LTV mortgages, we welcome the Government’s introduction of the Mortgage Guarantee Scheme for the industry, providing it is done in a sensible and prudent way that supports customers.
Supporting first-time buyers into homeownership is at the heart of what we do in the mutual sector, and this measure is a vital step in helping those with smaller deposits access the market.
The housing challenge in the UK is not just about supply, it’s about affordability. Many would-be homeowners, especially younger people and those affected by the economic instability of recent years, have been locked out of the market due to rising house prices and deposit shortfalls.
Underwriting more higher loan-to-value mortgages through this scheme could provide an important lifeline and help shift the balance for those on lower incomes.
We’re also supportive of the Bank of England’s recommendation to allow a higher mortgage lending limit, at over 4.5-times income, which could support up to 36,000 additional buyers, alongside the FCA’s work to simplify remortgaging rules.
It’s encouraging to see the Chancellor focus on practical reforms that support growth while also tackling the real challenges people face when trying to buy a home. Measures that allow greater flexibility in loan-to-income lending, particularly for first-time buyers, are a welcome step.
At a time when affordability continues to stretch so many, changes like this can make a meaningful difference, providing we continue to ensure that the mortgages people take on are right for their circumstances, especially if times become hard.
These reforms reflect a broader willingness to engage with the realities faced by today’s first-time buyers. However, these initiatives must go hand in hand with better financial education and long-term saving incentives that support deposit-building, including the preservation and promotion of the Cash ISA.
Cash ISAs remain a vital product for millions who simply cannot afford to risk losing their hard-earned capital investing in stocks and shares.
For those who can, many feel unsure where to invest or they feel poorly equipped to make complex decisions without access to affordable, independent advice, highlighting the very real ‘advice gap’ in the UK. We welcome the Chancellor’s decision to pause ISA changes and take more time to engage with the sector and the public.
This is an important opportunity to ensure that any future reforms strengthen, rather than undermine, accessible savings routes.
We also support the FCA’s ongoing consultation to create a simpler, more inclusive regulatory framework for advice, which we believe is crucial to helping more people save and invest confidently.
We hope to see continued collaboration between Government and the sector to create a financial services environment that’s fair, accessible and focused on the best outcome for the customer.
Jonathan Westhoff is chief executive at West Brom Building Society
