Young people have spoken out about the Government’s plan to introduce 99 per cent mortgages in a bid to make it easier to get on the housing ladder.
The proposals announced by Jeremy Hunt mean deposits as small as one per cent would be required on a property to help young adults find their own place quicker.
In Newcastle-upon-Tyne, the average house price for first-time buyers stood at £142,000 last year meaning a deposit of £1,420 would be needed under the new policy.
Youngsters in the city say they have been left struggling to afford high percentage deposits and have welcomed the plans which they say could get them on the ladder quicker.
Ciara Sheedy and her partner Will Underwood say they have been frustrated by the housing market so far and hope the announcement will boost their chances if it gets the green light.
Ciara Sheedy and her partner Will Underwood, both 22, say they have been frustrated by the housing market so far and hope the announcement will boost their chances if it gets the green light
Juliet Cooper, 25, from Bedfordshire, who has a budget of around £250K, said: ‘It’s like putting a bandaid on a bullet hole. It doesn’t address the root of the problem’
Ciara, 22, who works as a physio, said: ‘We’ve been looking for a while to get on the housing market.
‘But we have found it difficult to be able to afford a deposit because it is such a big lump sum of money to pay at once.
‘We have been looking at 10% deposits so far but I think it’s hard for people around our age in general the way it currently is.
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‘I think these plans would make it a lot easier for us to be able to get on the property ladder.
‘It would encourage us to get on the market a lot quicker and hopefully it means younger people will find somewhere a lot easier.’
Will, also 22, also hopes the policy will get the go-ahead.
The bartender said: ‘We have been looking away from the city itself to try find somewhere more affordable but it is still difficult.
‘So I do think this could go a long way in helping us get on the ladder if it actually went ahead.
‘Even if we have to borrow a little more in the long run at least we’d be on the ladder and we’d still probably be paying less a month than if we were to rent.’
Government figures told the Financial Times that no final decision had been made over the 99 per cent mortgage plan but said the Treasury-backed scheme was likely to be in the Chancellor’s Budget on March 6.
Neal Hudson, housing market analyst at Residential Analysts, told the newspaper: ‘There would be a greater risk of negative equity obviously with this.
‘You’d also be paying a premium mortgage rate, and it doesn’t necessarily address the problem of high prices.’
Madeline Baty-Young is just 16 but has already had a discussion with her dad about buying a house in Newcastle upon Tyne.
The music student, 16, said: ‘I think younger people would definitely be encouraged if [the] plans were brought in.
‘I want to live on the outskirts of Newcastle rather than be in the city itself and even that is tricky for people to afford as it is now.
‘I want to find somewhere eventually that is cheap enough but nice to live in.
‘I’ve spoken with my dad about this subject so many times and he says it’s better to start the process of buying sooner rather than later, so that’s what I plan to do.
Madeline Baty-Young is just 16 but has already had a discussion with her dad about buying a house in Newcastle upon Tyne
‘If this initiative comes in it should really help me do that.’
Juliet Cooper, 25, is hunting for a home with partner Tom Wallace, 31, an asbestos remover.
The retail manager from Thurleigh, Bedfordshire, claims the government should be focusing on lowering interest rates rather than backing 99% mortgages.
Juliet, who has a budget of around £250K, said: ‘It’s like putting a bandaid on a bullet hole. It doesn’t address the root of the problem.
‘They should be getting interest rates down as that is what is putting young people off buying.
‘I’m looking for a home but if I save for an extra few years and wait until interest rates come down I’ll be paying less long term and my monthly payments will be cheaper.
‘I can also save more and have a larger deposit which means I owe less on my mortgage.
‘We need to know what the terms and conditions of these mortgages are and how long it will take to pay them off.
‘It’s a good short term solution for some people who can’t save for a deposit but house prices could shoot up and it could leave young home owners stuck with negative equity or unable to move out of the home.
‘It doesn’t work long term. Young home owners will have way more debt.
‘They are doing this to try and pull young voters in but I can’t see who this will benefit.
‘It sounds great as it’s a new, exciting, idea but they should focus on other things, such as the interest rates.’
Lucian Cook, head of residential research at estate agency Savills, warned any scheme that boosted buyer numbers would need to be matched with measures to increase the supply of housing.
‘You might be addressing the deposit affordability issue, but you’re still left with the mortgage affordability issue,’ he said.
Emma Humphreys, a partner at law firm Charles Russell Speechlys, said: ‘These proposals would help first time buyers afford a deposit, but they don’t fix the issue of affording a home.
‘This growing matter of mortgage affordability would only be exacerbated by 99% per cent mortgages, as more people on the market increases demand and competitiveness.
‘This fundamental issue comes back to supply and demand. The Government simply needs to build more affordable housing, rather than announce temporary measures which are sticker plasters covering the real issue.’
Prime Minister Rishi Sunak announced a 95 per cent mortgage scheme when he was Chancellor in 2021.
The new mortgage guarantee scheme enabled homebuyers to secure a mortgage up to £600,000 with a 5 per cent deposit.
At his Autumn Statement in November, Mr Hunt extended the scheme until June 2025.