The UK government has announced that the Mortgage Guarantee Scheme, which launched in April 2021, has been extended for a further 12 months.

The scheme enables people to buy a property valued up to £600,000 with only a 5% deposit and has already helped more than 24,000 households get onto the property ladder.

Under the scheme the government offers lenders the financial guarantees they need to provide mortgages that cover the other 95% of the purchase price, subject to the usual affordability checks. The announcement means the scheme will be available until the end of 2023.

Chief Secretary to the Treasury, John Glen MP said, “For hard-working families facing today’s challenging economic conditions, it’s right that we continue to help them secure their first home or move into their dream house. Extending this scheme means thousands more have the chance to benefit and supports the market as we navigate through these difficult times.”

While the extension of the scheme has been widely welcomed by mortgage brokers, there are concerns that the predicted fall in house prices over the next 12 to 18 months could result in first time buyers falling into negative equity and potentially having their homes repossessed.