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Treasury’s new bid to boost 95% LTV mortgages

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The Treasury is holding talks with lenders and mortgage trade bodies to explore how mortgage indemnity guarantees can be used to improve access to 95 per cent loan-to-value mortgages, including offering Migs on older properties.

Talks are at an early stage but Money Marketing understands the Treasury has discussed a mortgage indemnity scheme that would be open to borrowers who do not want to buy a new-build home, unlike its NewBuy scheme.

Sources say no firm details have been drawn up and the Treasury is considering all options.

A source close to the talks says: “Essentially, the Treasury’s agenda is how to improve lending at 95 per cent as there is unmet demand there and something needs to be done about it.

“What it is considering is how mortgage insurance can be more widely used to solve the problem. Whether the Treasury makes taking out a Mig at high LTV lending compulsory is not off the table but it is not their first port of call.”

In March, the Government launched NewBuy, a Mig scheme where lenders offer 95 per cent LTV mortgages for borrowers looking for a new-build property that is jointly underwritten by housebuilders and the Government.

The scheme has come under criticism because it restricts borrowers to purchasing a new-build property and most participating lenders have not been given more favourable capital requirements.

A Treasury spokeswoman says: “We have said we will do more to help families who can afford a mortgage but are unable to raise a large deposit to buy their own homes. We are continuing to look at what can be done and will provide further details in due course.”

London & Country associate director of communications David Hollingworth says: “If the Treasury plans to launch a Mig-type scheme, lenders will need to be given relief on capital requirements in order to get some uptake. This type of scheme could coax lenders back into this part of the market.”


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