The UK mortgage guarantee scheme, which has supported tens of thousands of low-deposit homebuyers since its launch in April 2021, is set to close on 30 June — and the government has yet to reveal details of its promised replacement.
Introduced to help first-time buyers and others struggling with large deposits, the scheme enabled lenders to offer 95% loan-to-value mortgages. Under the initiative, banks could purchase a government guarantee covering the portion of the mortgage between 80% and 95% of a property’s value. If a borrower defaulted and the property was repossessed, the government would absorb the lender’s losses on that guaranteed portion.
Although not all lenders offering 95% mortgages used the guarantee scheme, it played a significant role in boosting access to the property market. By the end of December 2024, more than 53,000 home loans had been completed using the scheme, with 86% of these loans granted to first-time buyers.
Promised Successor Yet to Be Revealed
In February, the government said it would launch “a new, permanent, comprehensive mortgage guarantee scheme” to “open the door to home ownership for more young families and hard-working renters.” However, with less than a month to go before the current programme ends, no further information has been published.
The lack of clarity has raised concerns among prospective homeowners and mortgage lenders, who were told the new scheme would provide “long-term confidence” in the availability of low-deposit mortgages.
Impact on First-Time Buyers and Market Confidence
Figures released last week show the total value of the guarantees issued under the existing scheme stands at £1.6 billion, supporting mortgages worth £10.7 billion overall. The average property value purchased or refinanced under the scheme was £211,000 — making it a popular option for buyers in lower and middle-income brackets.
With the deadline looming, industry observers are calling for urgent clarity. A smooth transition to the promised permanent scheme is seen as critical to maintaining access to affordable mortgages amid ongoing housing market challenges.
