Labour plans to introduce a “freedom to buy” mortgage guarantee scheme are unlikely to achieve the desired impact in supporting prospective first-time buyers, according to Quilter.

Analysis by the wealth manager and financial adviser showed that that since its launch in April 2021, just 44,368 mortgages have been completed with the support of the current mortgage guarantee scheme – 86% of which, or 38,323, were first-time buyers.

Comparatively, Quilter’s analysis of freedom of information (FOI) data from the FCA showed that between 2021 and 2023, more than 1.13 million mortgages were secured by 18-30 year olds.

Quilter’s analysis revealed the number of people between the ages of 18 and 30 securing a mortgage each year has risen relatively steadily in the last decade, reaching 350,092 in 2023 compared to 252,558 in 2014.

However, this number has been trending downwards since a spike of 401,665 in 2021 which aligned with the stamp duty holiday introduced during the pandemic, resulting in a 13% fall in just two years.

Given mortgage rates and house prices are now much higher than a decade ago, which has piled pressure on affordability, prospective first-time buyers are having a much tougher time securing a mortgage.

Quilter said it is “imperative” that any schemes introduced by the new Labour Government are effective.

Mortgage expert at Quilter, Charlotte Nixon, said: “Given the current economic circumstances, young people’s finances are already incredibly stretched, so saving a deposit for a first home has been made all the more challenging.

“However, a high loan-to-value mortgage such as those that would be encouraged by Labour’s ‘freedom to buy’ scheme is simply not the answer. Such a scheme would not address the fundamental issue of high property prices relative to average incomes, which has been evidenced by the considerable lack of take up thus far.

“Not only have very few people made use of the scheme currently on offer, but with house prices still at risk of fluctuating, those that do could be at risk of negative equity. Having such a low deposit amount would leave people with little to no wiggle room in terms of house price changes before falling into what can be an extremely difficult situation to get back out of.”

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