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Prime Minister’s pledge on first-time buyer mortgages welcomed – but devil will be in the detail

Prime Minister’s pledge on first-time buyer mortgages welcomed – but devil will be in the detail

Martin & Co’s preferred mortgage partner Connect Mortgages has welcomed Boris Johnson’s pledge to turn Generation Rent into “Generation Buy”.

 

Speaking at the virtual Conservative Party conference this week, the Prime Minister outlined a promise to encourage more high loan-to-value (LTV) fixed mortgages, enabling cash-strapped first-time buyers to get a foot on the property ladder.

 

Mr Johnson said: "We need now to take forward one of the key proposals of our manifesto of 2019: giving young, first-time buyers the chance to take out a long-term, fixed-rate mortgage of up to 95% of the value of the home - vastly reducing the size of the deposit and giving the chance of home ownership - and all the joy and pride that goes with it - to millions that feel excluded.

 

"We believe that this policy could create two million more owner-occupiers - the biggest expansion of home ownership since the 1980s.

 

"We will help turn generation rent into generation buy."

 

Many first-time buyers have found their mortgage options limited since the coronavirus lockdown, with lenders withdrawing their high LTV products.

 

Liz Syms of Connect Mortgages said: “Since the lockdown, there has been a clear lack of high LTV mortgage products restricting the options for first-time buyers.

 

“The market has relied on lenders issuing limited tranches of products or offerings that involve family guarantees. Insurance-backed schemes that were intimated in the speech are not new.

 

“Those who have been in the mortgage market for some time will remember 'indemnity insurance' which provided security for lenders against the risk of default when offering a high LTV, but the applicants had to pay the cost of the insurance.

 

“Any initiatives that enable lenders to become comfortable again lending up to 95% will be very welcome, but we look forward to seeing the detail!”