PM reveals plans for ‘Generation Buy’

PM reveals plans for ‘Generation Buy’
Credit: REUTERS/Hannah McKay

Prime Minister Boris Johnson has asked ministers to develop plans to encourage long-term fixed-rate mortgages for buyers with 5 per cent deposits.

In an interview with The Telegraph, published on Friday (October 2), Mr Johnson said he wanted more people to get on the housing ladder and engage with capitalism.

The plans would likely involve reversing regulatory changes made after the financial crash that require lenders to stress test applicants.

He told the paper: "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."

The Telegraph reported it was “understood” that the government could accept some of the risk through a form of state guarantee to give lenders additional confidence.

However, Martin Stewart, founder of London Money, described high LTV mortgages as a “very active” part of the market until the onset of the pandemic.

Mr Stewart commented: “It is disingenuous to suggest this is a regulatory issue that needs unwinding.”

The government previously introduced a government guarantee with the Help to Buy mortgage guarantee scheme in 2013, which closed to new loans in 2016.

Under the scheme, the government offered lenders the option to purchase a guarantee on mortgage loans where the borrower had a deposit of between 5 per cent and 20 per cent.

In May the Intermediary Mortgage Lenders Association (IMLA) urged the government to assess the impact of regulatory changes made in the wake of the 2008 financial crisis and consider easing restrictions on lending.

The trade body suggested that stress testing measures, and controls on the proportion of higher loan to income lending, were preventing a large pool of potential buyers from entering owner-occupation, despite otherwise being able to meet the average repayment costs of a mortgage.

Lenders have also recently been coming in and out of the high LTV market after withdrawing products amid high demand.

Accord Mortgages, for example, is currently offering 90 per cent LTV products to first-time buyers until 8pm tomorrow (October 6).

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