Manning Stainton Leeds see huge demand after 5% deposit scheme announced

The Government-backed scheme, which was introduced on Monday, means that banks and lenders can now offer mortgage schemes to house hunters with just a five per cent deposit for homes up to £600,000.

It will work by offering lenders the guarantee they need to provide mortgages that cover the other 95 per cent, subject to the usual affordability checks.

Manning Stainton managing director Mark Manning said his branches across Leeds have already seen “huge” demand from first time buyers in the city.

Mr Manning said: “By guaranteeing 95 per cent mortgages, the Government will help thousands of young people to take their first step onto the property ladder and really help boost the first-time buyer market in Leeds.

“Since the coronavirus crisis started, high loan-to-value mortgages pretty much disappeared and it has been hugely prohibitive for many people, so the launch of government-backed 95 per cent mortgages will help to turn generation rent into generation buy.

“We’ve already experienced a huge number of enquiries from first-time buyers looking to take advantage of the scheme, so it will be really positive for the market and help many people secure their first home.”

The number of low deposit mortgages on the market shrank dramatically in the early days of the coronavirus pandemic, as lenders became much more cautious about offering “riskier” loans in the tough economy. The UK Government said that, when asked, 69 per cent of private renters who had looked into a mortgage reported they could not find many deals with a low deposit.

“Many people have found it impossible to take that crucial first step onto the property ladder,” he said.

“But home ownership should be within more people’s reach and the Government’s mortgage guarantee scheme is a real boost for first-time buyers.

“Creating more homeowners not only makes the market fairer, but it also adds much needed dynamism to the property market and the economy as a whole.”

However, Stephen Berson, director at Hunters Leeds, warned that there were already too many house hunters and not enough houses in the city. He said: “Since lockdown eased, we’ve been incredibly busy in central Leeds and with the introduction of five per cent mortgages, this increased further.

“Enquiries are coming from people in their late 20s and early 30s who can now afford to take a step onto the ladder thanks to the lower deposit.

“In Leeds, we’re seeing many second steppers who want to move from a flat to a house struggle to find somewhere as there is little incentive above the £600,000 benchmark.

“The second stepper can easily sell their home to a buyer with a five per cent deposit but they then can’t move elsewhere as demand is so high that prices have increased and the gains made from their first home aren’t strong enough to buy a new home without additional support.

“For example, there were 18 viewings for one home priced at £975,000 on the outskirts of Leeds. I’ve never seen demand like this.

“Put simply, there are far too many buyers chasing a small amount of stock which has increased prices at all levels of the market.”

Mr Berson added: “I would expect within the next few months for first-time buyers to decrease, as even with a five per cent deposit, prices and monthly repayments are again put out of reach. This coupled with an exodus of buy-to-let landlords who are deterred by the recent tax changes may lead to a possible decrease in prices in 2022.”

Lloyds, Santander, Barclays, HSBC UK and NatWest will be among the first to launch mortgages under the scheme, with Virgin Money following next month.

The scheme, which will be open for applications until December 31 2022, can be used for new or existing properties.