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New mortgage guarantee will help buyers with 5% deposit

There will be a major boost for first-time buyers in this week’s Budget with the return of 95% LTV mortgages. The new mortgage guarantee scheme designed to help first-time buyers with 5% deposits onto the housing ladder will be unveiled by Rishi Sunak on Wednesday.

The aim is to stimulate the housing market, get younger people onto the housing ladder, and increase property transactions. Mortgages with 5% deposits have been stopped by most banks during the pandemic.

The chancellor plans to incentivise lenders to provide mortgages to first-time buyers, and existing homeowners, with just 5% deposits to purchase properties worth up to £600,000. Sunak told the press: “Owning a home is a dream for millions and we want to help as many people as possible.”

Boris Johnson also said he wants “generation rent” to become “generation buy”. The prime minister commented: “Young people shouldn’t feel excluded from the chance of owning their own home and now it will be easier than ever to get onto the property ladder.”

Housebuilder shares were up by 3-5% in the first hour of trading on Monday 1 March.

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