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Budget 2021: Mortgage guarantee to help buyers with 5% deposit | Budget 2021: Mortgage guarantee to help buyers with 5% deposit |
(about 1 hour later) | |
A mortgage guarantee scheme to help people with small deposits get on the property ladder is set to be announced at next week's Budget. | |
The government will offer incentives to lenders, bringing back 95% mortgages which have "virtually disappeared" during the pandemic, the Treasury says. | |
Chancellor Rishi Sunak says he will use the Budget to level with people about the pandemic's impact on the economy. | Chancellor Rishi Sunak says he will use the Budget to level with people about the pandemic's impact on the economy. |
Amid the crisis, government borrowing reached £271bn for the financial year. | |
That is £222bn more than a year ago and has pushed the national debt to £2.13 trillion. | That is £222bn more than a year ago and has pushed the national debt to £2.13 trillion. |
Explaining the government's economic response to the pandemic, Mr Sunak told the Financial Times: "We went big, we went early, but there is more to come and there will be more to come in the Budget. But there is a challenge [in the public finances] and I want to level with people about the challenge." | Explaining the government's economic response to the pandemic, Mr Sunak told the Financial Times: "We went big, we went early, but there is more to come and there will be more to come in the Budget. But there is a challenge [in the public finances] and I want to level with people about the challenge." |
He added: "I will do whatever it takes to protect the British people through this crisis and I remain committed to that." | He added: "I will do whatever it takes to protect the British people through this crisis and I remain committed to that." |
Labour has criticised the government for a "stop, start" approach to support measures during the pandemic. | Labour has criticised the government for a "stop, start" approach to support measures during the pandemic. |
The chancellor is also expected to announce an £126m scheme for traineeships in England. | |
It will include a new "flexi-job" apprenticeship, enabling apprentices to work with different employers in one sector. With unemployment at its highest level for almost five years,Mr Sunak said this was "vital" support for getting people back into work. | |
What is the Budget and when will it happen? | What is the Budget and when will it happen? |
'Furlough is a lifeline, I hope they extend it' | 'Furlough is a lifeline, I hope they extend it' |
Sunak injecting £126m to boost traineeship scheme | Sunak injecting £126m to boost traineeship scheme |
The chancellor will unveil his Budget, including the mortgage scheme, in a Commons speech on Wednesday | |
Prime Minister Boris Johnson says he wants "generation rent" to become "generation buy", adding: "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." | |
The new mortgage guarantee scheme is not limited to new-build homes or first-time buyers | The new mortgage guarantee scheme is not limited to new-build homes or first-time buyers |
The coronavirus pandemic has meant there are now few of them available, the Treasury said, with just eight on the market in January. | |
Low-deposit mortgages are often seen as riskier by banks as they are more vulnerable to negative changes in property prices - meaning people hold more debt than their home is worth. | Low-deposit mortgages are often seen as riskier by banks as they are more vulnerable to negative changes in property prices - meaning people hold more debt than their home is worth. |
Under the scheme, which will launch across the UK in April, the government will offer to take on some of this risk. | |
It is not restricted to first-time buyers or new-build homes, but there will be a £600,000 limit. | It is not restricted to first-time buyers or new-build homes, but there will be a £600,000 limit. |
It is based on the Help to Buy mortgage guarantee scheme, which was introduced under David Cameron's government in 2013 and closed to new loans at the end of 2016. | |
The Treasury said that policy "reinvigorated the market for high loan-to-value lending after the 2008 financial crisis" and enabled 100,000 households to buy a property across the UK. | The Treasury said that policy "reinvigorated the market for high loan-to-value lending after the 2008 financial crisis" and enabled 100,000 households to buy a property across the UK. |
Of these, 80% were purchases by first-time buyers, statistics showed. But housing charity Shelter said the scheme increased house prices by 1.4%. | Of these, 80% were purchases by first-time buyers, statistics showed. But housing charity Shelter said the scheme increased house prices by 1.4%. |
4 ways it may get harder for first-time buyers | 4 ways it may get harder for first-time buyers |
Help to Buy deadline extended amid Covid delays | Help to Buy deadline extended amid Covid delays |
Did Help to Buy help first-time buyers? | Did Help to Buy help first-time buyers? |
The Help to Buy mortgage guarantee scheme was distinct from the Help to Buy equity loan scheme that still allows first-time buyers in England to take out a government loan to put towards the cost of buying a newly-built home. | The Help to Buy mortgage guarantee scheme was distinct from the Help to Buy equity loan scheme that still allows first-time buyers in England to take out a government loan to put towards the cost of buying a newly-built home. |
The equity loan scheme has been criticised for inadequately targeting those most in need of financial help, and for boosting the profits of big housebuilders. | The equity loan scheme has been criticised for inadequately targeting those most in need of financial help, and for boosting the profits of big housebuilders. |
The price of a typical UK home has surpassed £250,000 for the first time in recent months, according to the Halifax. | The price of a typical UK home has surpassed £250,000 for the first time in recent months, according to the Halifax. |
The new scheme could coincide with the end of a stamp duty holiday in England and Northern Ireland, which is due to end on 31 March, though this may yet be extended. | The new scheme could coincide with the end of a stamp duty holiday in England and Northern Ireland, which is due to end on 31 March, though this may yet be extended. |
'Too early' | 'Too early' |
Mr Sunak also has to decide whether to raise taxes in light of pandemic spending. | Mr Sunak also has to decide whether to raise taxes in light of pandemic spending. |
In the run-up to the 2019 election, the Conservatives promised not to increase income tax, National Insurance Contributions or VAT - but the chancellor could argue that circumstances have changed. | |
Carlisle MP John Stevenson, a member of the Conservative Northern Research Group, said it was "too early" for tax rises. | |
He told the BBC: "We're not through the pandemic yet, we've still got a few months to go, so we want to see continuing support and we'll probably have a much better idea of where the economy is come the autumn." | |
But former Conservative chancellor Lord Clarke said he expected taxes to be raised in the Budget. | But former Conservative chancellor Lord Clarke said he expected taxes to be raised in the Budget. |
He said: "Every sensible person knows that this spending we have embarked on to stop the economy collapsing is taxpayer spending, this is the taxpayer's debt we are piling up now and if we don't get it under control before inflation comes back then we will face a financial crisis." | |
He said the crisis had been "unfair financially" and had hit "the poor, the young, the low-paid, the vulnerable". | |
Shadow chancellor Anneliese Dodds told the Times the Conservatives' approach to furlough and other economic support measures showed "a failure of confidence" and had "led to greater negative economic impact", resulting in job losses. | |
Next week's announcement is also expected to include a new £100m taskforce to crack down on fraudsters who have exploited support schemes, such as furlough. | Next week's announcement is also expected to include a new £100m taskforce to crack down on fraudsters who have exploited support schemes, such as furlough. |
Tax officials have opened about 10,000 inquiries into suspected fraudulent activity, the government said. | Tax officials have opened about 10,000 inquiries into suspected fraudulent activity, the government said. |
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DOWNTIME SYMPHONY: An hour of wind-down music to help you press pause and reset your mind this weekend | DOWNTIME SYMPHONY: An hour of wind-down music to help you press pause and reset your mind this weekend |
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