Mortgage Guarantee Scheme extended until the end of 2025

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Mortgage Guarantee Scheme extended until the end of 2025 Posted On 27 November 2023

It’s great news for mortgage lenders, as the Mortgage Guarantee Scheme is extended for another two years!

On Wednesday 22^nd November the Chancellor of the Exchequer, Jeremy Hunt, revealed many interesting developments in his autumn statement, and new legislation regarding the Mortgage Guarantee Scheme was one key point regarding the housing market.

A government-backed home ownership scheme that was launched back in April 2021, the Mortgage Guarantee Scheme was designed to help people get onto the housing ladder by offering lenders the financial guarantees they need to cover the remaining 95% of the mortgage on a property. This scheme is eligible for properties worth up to a maximum market value of £600,000, ultimately compensating mortgage lenders for a portion of net losses suffered in the event of repossession.

According to Cebr, based on a quarterly average property, repossessions will have more than doubled in one year alone, increasing from 2,230 in 2023 to 4,860 in 2024. There is no doubt that a large portion of the cause of this is the ongoing cost of living crisis, with the forecasts showing a likely home repossession figure of 6,000 for 2025.

The Mortgage Guarantee Scheme applies down to 80% of the purchase value of the guaranteed property covering 95% of these net losses, meaning the lender therefore retains a 5% risk in the portion of losses covered by the guarantee. Ultimately, this scheme is a huge benefit to mortgage lenders in the UK.

The scheme was originally due to close to new accounts on 31^st December 2023, but thanks to the Chancellor’s new Autumn Statement this deadline is now open until the end of 2025, providing an additional and much-welcomed two years of relief to UK mortgage lenders.

#property #autumnstatement #mortgageguaranteescheme