The government’s latest Spending Review has confirmed the Mortgage Guarantee Scheme is set to become a permanent feature of the housing market, though the news was not accompanied by a formal announcement or further detail.
Buried in the full review document, the decision appears on page 32 of the main report, quietly extending a scheme that had been due to expire at the end of this month.
Sarah Thompson, managing director of Mortgage Scout, part of Leaders Romans Group, said the low-profile confirmation came as something of a surprise. “It was easy to miss, but [the] Government Spending Review quietly confirmed that the Mortgage Guarantee Scheme will be made permanent,” she said. “There was no formal announcement and no further details, and with the current scheme ending on 30 June, buyers are left waiting until July to understand exactly what will change.”
The scheme, originally introduced during the pandemic recovery period, provides a government-backed guarantee on the portion of a mortgage between 80% and 95% loan-to-value. This support enables lenders to offer 95% LTV mortgages to buyers with only a 5% deposit – a critical threshold for many would-be homeowners who are currently renting.
“With high rents and rising living costs making it harder to save, this kind of support is critical for those trying to move from renting to owning,” Thompson added.
However, she pointed out that the scheme in its current form excludes new-build properties, a significant issue for many first-time buyers. “If the government wants to improve access, it should look at widening the scope of the scheme and making it more inclusive,” she said.
Although borrowing costs have started to ease following last year’s interest rate peaks, the affordability challenge now lies more in the upfront costs, particularly the deposit requirement. A permanent form of the scheme could deliver more consistency for lenders and borrowers alike, Thompson suggested.
“Although mortgage rates are now starting to fall, the size of the deposit remains the biggest challenge for most buyers. A permanent guarantee scheme could bring much-needed consistency to the market and give both lenders and borrowers greater confidence,” she said. “We will be watching closely for the details in July, but the signal from the government is clear: helping buyers with smaller deposits is back on the agenda.”
