Following newspaper headlines over the weekend, the government has confirmed that it will be offering a mortgage guarantee scheme.

The mortgage guarantee scheme is designed to encourage lenders to lend mortgages of up to 95% loan to value (LTV).

Virgin Money said it would be an active participant in the Help to Buy Guarantee Scheme. In a statement, it said: “We know how important it is that first time buyers get the right support and we look forward to launching Virgin Money Help to Buy mortgages to support this segment of the mortgage market.”

Rob Clifford, CEO of Stonebridge Group, said: “Undoubtedly, anything that helps boost the number of low-deposit mortgages in the market is going to be helpful and is welcome, because lenders have understandably retreated from this space over the last 12 months.

“The Help to Buy version did boost availability of high LTV mortgages and we would anticipate this will do the same, given that it should generate more competition and deliver more consumer choice; it may also increase products from those lenders who don’t participate in the formal scheme but decide to utilise private mortgage insurance to facilitate these loans.

“Supply of affordable homes to the market remains key – without greater supply at the right price, even with the return of 95% mortgages, many would-be first-time buyers will still find home ownership elusive. The most significant obstacles for first-time buyers remain both the deposit and headline purchase price itself.”