Chancellor Jeremy Hunt is looking at ways of helping first-time buyers onto the housing ladder in the upcoming Autumn Statement - including an extension of the mortgage guarantee scheme for a further year, according to reports.
According reports in The Sunday Times the scheme, which helps first-time buyers buy their first property with a deposit as small as 5 per cent, will be extended past for an extra year past its end month of December.
The scheme applies to properties worth up to £600,000 and encourages lenders to offer low-deposit mortgages as the state underwrites a portion of the risk.
It was also reported Hunt is looking at ways of helping buyers save for a deposit through improvements to existing Isa products or introducing new tax-free savings options.
Some Isa products, including the Help to Buy and Lifetime Isas, allow savers to put money aside that can be used to buy a house, provided the house does not exceed a certain value.
The Help to Buy scheme, which closed in March, gave first-time buyers a 25 per cent government bonus so long as the house was worth less than £450,000 in London, and £250,000 in the rest of England.
The Lifetime Isa, which still exists, allows savers to use their savings to purchase a house without incurring tax charges, however, this has a property price cap set at £450,000 uniformly across the country.
The Sunday Times reported Hunt is looking at increasing the property price cap on the existing range of Isa products, and potentially introducing a new Isa product for first-time buyers, following the closure of the Help to Buy scheme.
This follows the Bank of England holding interest rates at 5.25 per cent in September after a series of rises that have driven mortgage rates to 6 per cent for a five-year fixed-rate product and 6.5 per cent for a two-year fix.
Additionally, lenders have cut the number of products available for buyers with small deposits, thereby worsening options for first time buyers, leading to challenging circumstances for prospective buyers.
tom.dunstan@ft.com
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