UK Government Considers 99% Mortgage Scheme Amid Criticisms

The proposed scheme, aimed at aiding first-time buyers, could inflate house prices and increase the risk of negative equity, warn critics.

UK Prime Minister Rishi Sunak is reportedly considering a government-backed 99% mortgage scheme, which would allow first-time buyers to purchase a home with just a 1% deposit.
The scheme is being considered ahead of the Spring Budget, due to be delivered by Chancellor Jeremy Hunt on March 6.
However, critics warn that such a scheme could inflate house prices and put homeowners at risk of negative equity, where the house is worth less than the mortgage.
Banking sources suggest that the Prudential Regulation Authority could raise concerns about banks' exposure to 99% loan-to-value (LTV) mortgages, even if they were partially underwritten by the government.
Instead of introducing such schemes, some argue that the government should tackle the root cause of the housing crisis by liberalising the planning system and making it easier to build new homes.