The Government’s Mortgage Guarantee Scheme has supported 50,038 mortgages since the launch of the scheme in April 2021, 86% of which have been purchases by first-time mortgages.

According to the latest quarterly figures published by the Treasury, the total value of mortgages supported by the scheme has now reached £9.9bn.

Under the scheme, the Government offers lenders the option to purchase a guarantee on mortgage loans where the borrower has a deposit of less than 10%. The guarantee compensates participating mortgage lenders for a portion of net losses suffered in the event of repossession and applies down to 80% of the purchase value of the guaranteed property covering 95% of these net losses.

The lender retains a 5% risk in the portion of losses covered by the guarantee and ensures that the lender retains some risk in every mortgage originated.

So far, the average value of a property purchased or remortgaged through the scheme is now sitting at £208,499, which remains significantly down on the overall average UK house price of £292,000.

Financial planner at Quilter, Holly Tomlinson, commented that mortgage completions supported by the scheme had” tailed off significantly” since it first launched, but noted that the latest figures show a “slight increase in uptake”.

“Between July to September 2024, 4,263 completions were supported,” Tomlinson said. “Comparatively, in the first quarter of 2024 just 1,613 completions utilised the scheme. This may be as a result of more people trying to push through completions ahead of the upcoming stamp duty changes.

“However, the average property value under the scheme was £208,499, significantly below the national average. This raises questions about the scheme’s ability to cater to those in more expensive parts of the country.”

Tomlinson added that the Government’s decision not to extend the increase to the stamp duty threshold for first time buyers will “pile yet more pressure” on prospective first-time buyers.

“Those who have been scrimping and saving to build an adequate deposit will soon find themselves facing a hefty tax bill of up to £5,000, eroding affordability further and making homeownership even more expensive,” she continued.

“For first-time buyers, what’s truly needed is a commitment to addressing housing supply. Without sufficient stock, no amount of demand-side intervention will solve the affordability crisis.

“It is vital that the Government prioritises policies that tackle the imbalance between supply and demand, such as incentivising housebuilding, streamlining planning processes, and increasing investment in affordable housing.”

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