The Prime Minister’s pledge this week to encourage lenders to offer more high loan-to-value mortgages in the market has been welcomed with caution by Whitegates’ preferred mortgage partner.
Connect Mortgages said that any bid to boost home ownership options for young first-time buyers was a step in the right direction but insisted more detail on Boris Johnson’s plan was needed.
Mr Johnson told the virtual Conservative Party Conference: “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 and giving the chance of home ownership - and all the joy and pride that goes with it - to millions that feel excluded.
"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."
However, Liz Syms of Connect said more information was needed on exactly how the Prime Minister’s plan would work.
She added: “Since the lockdown, there has been a clear lack of high LTV mortgage products restricting the options for first-time buyers.
“The market has relied on lenders issuing limited tranches of products or offerings that involve family guarantees. Insurance-backed schemes that were intimated in the speech are not new.
“Those who have been in the mortgage market for some time will remember 'indemnity insurance' which provided security for lenders against the risk of default when offering a high LTV, but the applicants had to pay the cost of the insurance.
“Any initiatives that enable lenders to become comfortable again lending up to 95% will be very welcome, but we look forward to seeing the detail!”