London Daily

Focus on the big picture.
Thursday, Oct 09, 2025

Budget 2021: Mortgage guarantee to help buyers with 5% deposit

Budget 2021: Mortgage guarantee to help buyers with 5% deposit

A mortgage guarantee scheme to help people with small deposits get on the property ladder is set to be announced at next week's Budget.

The government will offer incentives to lenders, bringing back 95% mortgages which have "virtually disappeared" during the pandemic, the Treasury says.

Chancellor Rishi Sunak says public finances are facing a "challenge" from the pandemic's impact on the economy.

The government has borrowed £271bn this financial year - up £222bn on 2019-20.

This has pushed the national debt to £2.13 trillion.

Explaining the government's economic response to the pandemic, Mr Sunak told the Financial Times: "We went big, we went early, but there is more to come and there will be more to come in the Budget. But there is a challenge [in the public finances] and I want to level with people about the challenge."

He added: "I will do whatever it takes to protect the British people through this crisis and I remain committed to that."

Former Conservative chancellor Lord Clarke called for Mr Sunak to raise taxes in order to bring the UK's finances under control, and warned "if we don't get it under control before inflation comes back then we will face a financial crisis".

The question of tax rises is one the chancellor will need to address when he unveils his Budget in a Commons speech on Wednesday.

In the run-up to the 2019 election, the Conservatives promised not to increase income tax, National Insurance Contributions or VAT - but Mr Sunak could argue circumstances have changed.

Carlisle MP John Stevenson, of the Conservative Northern Research Group, said it was "too early" for tax rises, saying UK still had a few months of the pandemic to get through and he wanted to see continuing support.

But Lord Clarke said the pandemic had been "unfair financially" on "the poor, the young, the low-paid, the vulnerable" and suggested making people who continue in full-time work after the age of 65 pay the same taxes as younger people.

Labour has criticised the government for a "stop, start" approach to support measures during the pandemic. Shadow chancellor Anneliese Dodds told the Times her party did not support an "immediate" increase in corporation tax but would welcome longer-term rises and said she wanted a "more progressive tax system".

The chancellor is also expected to announce an £126m scheme for traineeships in England.

It will include a new "flexi-job" apprenticeship, enabling apprentices to work with different employers in one sector. With unemployment at its highest level for almost five years, Mr Sunak said this was "vital" support for getting people back into work.


Mortgage providers will only lend to those with a regular income, irrespective of any government incentive.

But young adults' finances, and their employment prospects, have been hit hard by this pandemic. It was the same in the financial crisis of a decade ago.

That is why jobs will be central to this Budget - both protecting them now and creating them in the future to aid an economic recovery.

While the chancellor may be able to borrow fairly cheaply now to pay for that support, the prospect of future tax rises to foot the bill will no doubt be addressed too.

Covid has led everyone to face the realities of home, work, and working from home. On Wednesday, many will be looking to Mr Sunak to save their jobs and keep a roof over their heads - whether they own it, or not.

The new mortgage scheme is not restricted to first-time buyers or new-build homes, but there will be a £600,000 limit.

The coronavirus pandemic has meant there are now few low-deposit mortgages available, the Treasury said, with just eight on the market in January.

They are often seen as riskier by banks as they are more vulnerable to negative changes in property prices - meaning people hold more debt than their home is worth.

Under the scheme, which will launch across the UK in April, the government will offer to take on some of this risk.


It is based on the Help to Buy mortgage guarantee scheme, which closed to new loans at the end of 2016, a policy the Treasury said "reinvigorated the market for high loan-to-value lending after the 2008 financial crisis".

But housing charity Shelter said that scheme increased house prices by 1.4%.

Shadow housing secretary Thangam Debbonaire also raised concerns, saying young people needed "genuinely affordable" new houses to be built and did not want to go "back to the days of sky-high mortgages".

The new scheme could coincide with the expected end of a stamp duty holiday in England and Northern Ireland on 31 March - though this may yet be extended.

Next week's announcement is also expected to include a new £100m taskforce to crack down on fraudsters who have exploited support schemes, such as furlough.

Tax officials have opened about 10,000 inquiries into suspected fraudulent activity, the government said.

Newsletter

Related Articles

0:00
0:00
Close
France: Less Than a Month After His Appointment, the New French Prime Minister Resigns
Hungarian Prime Minister Viktor Orbán stated that Hungary will not adopt the euro because the European Union is falling apart.
Sarah Mullally Becomes First Woman Appointed Archbishop of Canterbury
Mayor in western Germany in intensive care after stabbing
Australian government pays Deloitte nearly half a million dollars for a report built on fabricated quotes, fake citations, and AI-generated nonsense.
US Prosecutors Gained Legal Approval to Hack Telegram Servers
Macron Faces Intensifying Pressure to Resign or Trigger New Elections Amid France’s Political Turmoil
Standard Chartered Names Roberto Hoornweg as Sole Head of Corporate & Investment Banking
UK Asylum Housing Firm Faces Backlash Over £187 Million Profits and Poor Living Conditions
UK Police Crack Major Gang in Smuggling of up to 40,000 Stolen Phones to China
BYD’s UK Sales Soar Nearly Nine-Fold, Making Britain Its Biggest Market Outside China
Trump Proposes Farm Bailout from Tariff Revenues Amid Backlash from Other Industries
FIFA Accuses Malaysia of Forging Citizenship Documents, Suspends Seven Footballers
Latvia to Bar Tourist and Occasional Buses to Russia and Belarus Until 2026
A Dollar Coin Featuring Trump’s Portrait Expected to Be Issued Next Year
Australia Orders X to Block Murder Videos, Citing Online Safety and Public Exposure
Three Scientists Awarded Nobel Prize in Medicine for Discovery of Immune Self-Tolerance Mechanism
OpenAI and AMD Forge Landmark AI-Chip Alliance with Equity Option
Munich Airport Reopens After Second Drone Shutdown
France Names New Government Amid Political Crisis
Trump Stands Firm in Shutdown Showdown and Declares War on Drug Cartels — Turning Crisis into Opportunity
Surge of U.S. Billionaires Transforms London’s Peninsula Apartments into Ultra-Luxury Stronghold
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Jeff Bezos Calls AI Surge a ‘Good’ Bubble, Urges Focus on Lasting Innovation
Japan’s Ruling Party Chooses Sanae Takaichi, Clearing Path to First Female Prime Minister
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Taylor Swift’s ‘Showgirl’ Launch Extends Billion-Dollar Empire
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
×