Long-term first-time buyer mortgages will need big government backing

New home almost finishedImage copyright
Getty Images

There is very little detail on the idea of supporting first-time buyers with small deposits with new long-term mortgages.

Mortgages that offer 95% of a property’s value have been a fairly commonplace feature of the market, but have always been more expensive, reflecting their risk.

In recent weeks they have spiked in cost, and become less available, despite Bank of England base rates being slashed to historic lows.

Commercial banks are focusing on the risk of losing money as unemployment rises, particularly in the immediate aftermath of rapidly rising house prices.

This is a risky time to be lending to the riskiest part of the residential mortgage market.

Image copyright
Getty Images

Returning that market to normal would be challenging enough.

Banks are currently being told to accept mortgage holidays. But Boris Johnson also wishes to make these new mortgages available on long-term fixes, which has

Read More