Boris Johnson has recently announced plans to introduce 95% LTV mortgages. This means individuals will only need a 5% deposit to purchase property.

He also plans to introduce these mortgages without the need for stress testing. Mortgage stress testing involves banks checking whether an individual can still make their repayments at a rate higher than the one paid.

What does the Prime Minister have to say?

The Prime Minister has argued that there will be “some form of guarantee” to mortgage lenders. This will reduce the risk to banks for providing 95% LTV loans.

In his latest interview with the Telegraph, the Prime Minister has shared his thoughts on the subject. He argues that capitalism is “vital” within society and many people feel “totally excluded” from this process.

He also states the importance of home ownership. Arguing that these planned 95% LTV mortgages will help many individuals who perhaps could not own a home in the past get on the property ladder.

In his speech he said he wants this generation to be “generation buy”. Which has a strong desire to want to own property rather than rent.

Since the pandemic there has been an extremely limited number of high LTV mortgages available. Especially to young people.

Nisha Vaidya from Bankrate has argued that currently it is a really “tough market” for first time buyers. She states that any efforts to help this group of individuals are “certainly welcome”.

The withdrawal of high LTV mortgages is part of the problem of course; but rising house prices have also payed their part. Making home ownership seem an unrealistic accomplishment for many young people on potentially lower income.

As a result, the efforts made by the government are certainly needed, particularly for first time buyers. Hopefully, the availability of 95% LTV mortgages produce the generation of home buyers that the Prime Minister is encouraging.