Customers and lenders need a government-backed 95% LTV mortgage scheme in the wake of the pandemic, according to Phil Bailey, director at Twenty7Tec.

Bailey said that while there has been a 40% increase in mortgage activity due to the stamp duty holiday, he believes lenders’ affordability and acceptance criteria remains stricter than it has been for many years.

This coupled with rising house prices as well as rents, has resulted in it becoming much harder for individuals to save 10% to 15% for a deposit.

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Bailey said: “A scheme that supports both customers and lenders will surely provide much needed security and confidence in the mortgage and housing market.

“The more confident lenders are in their future outlook and security, the lower their risk appetite and the easier it is to secure higher LTV mortgages.”

He went on to say that a key factor in the potential success of the mortgage guarantee scheme will be its simplicity and how lenders consider income multiples, affordability and the price point they set their products and rates at.

He added: “Previous MIG (Mortgage Indemnity Guarantee) schemes have not always provided the rates or acceptance criteria to make the proposition really meet buyer demand.

“The devil will be in the detail and how lenders chose to receive today’s news.”