Boris Johnson Pledges Five Per Cent Deposits For First Time Buyers
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Prime Minister Boris Johnson has pledged to help 'generation rent' by introducing five per cent mortgage deposits for first time buyers.
Speaking at the annual conservative conference, the PM has promised to transform "generation rent into generation buy" by making mortgages more affordable, both with lower deposits and long term fixed rates.
Boris said the plans would create two million more home owners, in what he's called "the biggest expansion of home ownership since the 1980s".
Mortgages typically run to around 15-20 per cent of the property's value, something that feels completely out of reach for so many young people hoping to get on the property ladder.
And even if they can secure the deposit, with the amount buyers can borrow limited to around 4.5 times their salary, this can also cause a hurdle - especially within the country's most expensive regions.
"We need now to take forward one of the key proposals of our manifesto of 2019: giving young, first-time buyers the chance to take out a long-term, fixed-rate mortgage of up to 95% of the value of the home - vastly reducing the size of the deposit," he said, at the virtual conference.
"We believe that this policy could create two million more owner-occupiers - the biggest expansion of home ownership since the 1980s. We will help turn generation rent into generation buy."
Ahead of the conference, the PM also told the Telegraph: "I think a huge, huge number of people feel totally excluded from capitalism, from the idea of home ownership, which is so vital for our society. And we're going to fix that - 'Generation Buy' is what we're going for.
"... We need mortgages that will help people really get on the housing ladder even if they have only a very small amount to pay by way of deposit, the 95 per cent mortgages. I think it could be absolutely revolutionary, particularly for young people."
Before the end of 2016, there was a scheme in place - known as the Help to Buy Guarantee Scheme - which offered lenders a guarantee from the government on 95 per cent mortgages.
It meant if the buyer defaulted on the payment, the government would guarantee some of the cost. This was set up to encourage more lenders to provide mortgages to first time buyers, however, the scheme was pulled at the end of 2016.