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.
Money Marketing understands talks are at an early stage but 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 with its NewBuy scheme.
Sources say no firm details have yet been drawn up and the Treasury is considering all options.
A source close to the talks says: “Essentially, the Treasury’s agenda is how do we improve lending at 95 per cent mortgages 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 because all participating lenders except Barclays have not been given more favourable capital requirements for participation in the scheme.
London & Country associate director of communications David Hollingworth says: “It all depends on the details but if the Treasury plans to launch a MIG-type scheme, then to get some uptake lenders will have to be given relief on capital requirements. This type of scheme will coax lenders back into this part of the market.”
A Treasury spokeswoman says: “We have said that 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.”