Mar 1, 2021

Investors already have the measure of another UK mortgage guarantee scheme

Wednesday's budget is likely to revive the mortgage guarantee scheme, which was a less popular companion to the Help To Buy equity loan. Pre-budget leaks suggest little ambition to make the new guarantee scheme more widely used. With first-time buyers ordinarily making up about a third of the total mortgage market, the new scheme as reported will be a drop in the ocean. Their customer order books are already full, their substantial landbanks make it a hard market to enter and their shareholder returns are already being restored, in spite of 2020 completion rates that are likely to be down a fifth on 2019's already meagre level. All of which raises one question: why is the government not rebooting another historic scheme instead? The 2012 NewBuy scheme was Help to Buy's quickly cancelled predecessor, offering state backstopped mortgages but also requiring housebuilders to pay a percentage of the value of homes sold into an indemnity fund.

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