The Chancellor will use Wednesday’s Budget to unveil a new mortgage scheme aimed at getting tens of thousands of people onto the property ladder.
Under the new programme, first time or current homeowners looking to buy a house of up to £600,000 will need a deposit of just five per cent to secure a mortgage.
The Treasury said that the government will offer lenders the guarantee they need to provide mortgages that cover the other 95 per cent.
So-called 95 per cent mortgages have more or less disappeared as a result of the pandemic, it added. Just eight such products were available as of last month.
The lending scheme will be made available in April, the Treasury said.
Chancellor Rishi Sunak said: “Owning a home is a dream for millions across the UK and we want to help as many people as possible. Saving up for a big deposit can often be difficult, and the pandemic has meant there are fewer low deposit mortgages available.
“So by giving lenders the option of a government guarantee on 95% mortgages, many more products will become available, helping people to achieve their dream and get on the housing ladder.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “Turning ‘generation rent’ into ‘generation buy’ has been a focus for Boris Johnson for a while so the return of 95 per cent loan-to-value mortgages for first-time buyers doesn’t come as a complete surprise.
“This, coupled with the extension of the stamp duty holiday, will result in a Budget which is a real boost for buyers.
Wednesday’s budget comes as government borrowing hit £271bn, with the national debt now at £2.13 trillion due to the pandemic.
For most of his tenure, Sunak has been forced to hand out large chunks of government cash to keep the economy afloat and keep people in jobs.
But now he is set to unveil the start of his plan to bring the country’s finances under control, with speculation rife he will look to raise taxes.