Brokers have said the government’s proposed 99 per cent mortgage scheme “would never have ended well” following reports the idea has been scrapped.
government insiders report the scheme has been scrapped, Whenthebanksaysno.co.uk managing director, Emma Jones, has stated.
There have been reports from government insiders that the chancellor has scrapped plans for a 99 per cent mortgage after resistance from the banking community.
Habito CEO, Ying Tan, said the scheme “was only ever a headline maker and not fit for purpose” and that he was glad it had been stopped before it started.
Additionally, R3 Mortgages founder and director, Riz Malik, said: “As much as the UK property market needs stimulation, this was never the answer.”
Lifetime Wealth Management mortgage and protection specialist, Katy Eatenton, shared this sentiment: “I am glad this idea was short-lived.”
Scheme necessity
While many brokers acknowledged the need for such a scheme, they thought the proposal wouldn’t be effective.
Mint FS director, Matthew Jackson, said the housing market needs "invigorating" but that 99 per cent mortgages were “impractical” and “unworkable”.
Jackson added: “Brokers across the country will breathe a sigh of relief as they will not have to deal with prospective buyers who expect to buy a home with little to no income and who would be at risk of negative equity.”
In addition, Tan commented: “Homebuyers need and deserve a better thought-out scheme that is sustainable, affordable and lasts the distance.”
While many brokers were pleased, SJ Mortgages director, Jack Tutton, pointed out that buyers may not feel the same, saying: “This is disappointing news for first-buyers as this seemed to attract a lot of attention.”
However, The Mortgage Uni mortgage expert, Peter Stamford, said: “While this will be disappointing news for a large number of potential first-time buyers, it is clearly the best outcome for the stability of the housing market in general.
“This idea would have likely seen an artificially inflated housing bubble, which, when it burst, could have trapped a lot of first-time buyers in negative equity.”
A similar sentiment was shared by Brooklyns Financial director, Harps Garcha, who said that, while the scheme’s scrapping may leave many first-time buyers feeling “disheartened”, the reasons behind this move are “hardly surprising”.
She specified that affordability challenges for banks, particularly in more expensive regions, coupled with the risk of negative equity for new buyers, made the short-term appeal to such a stimulus “difficult to justify”.
tom.dunstan@ft.com
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