Good news for homebuyers across the UK — especially those struggling with high deposit requirements. The government has announced that the Mortgage Guarantee Scheme, which supports 95% loan-to-value (LTV) mortgages, will become a permanent fixture in the housing market from July 2025.
The scheme, first introduced under Help to Buy in 2013 and relaunched in 2021, helps lenders offer low-deposit mortgages by backing part of the loan. This update is set to improve mortgage availability for first-time buyers, those with smaller savings, and anyone looking to step onto or move up the property ladder.
Permanent 5% Deposit Mortgage Scheme Set to Launch This July
The Mortgage Guarantee Scheme was initially due to end in June 2025. But following growing calls for support for low-deposit buyers, the UK Government has now confirmed the scheme will be made permanent from July onwards.
Designed to help people secure mortgages with just a 5% deposit, the scheme works by providing a government guarantee on the portion of the loan between 80% and 95%. This encourages lenders to offer higher loan-to-value mortgages, reducing the deposit barrier for thousands of potential buyers.
Industry leaders are welcoming the move. Sarah Thompson, Managing Director of Mortgage Scout, notes: “Although mortgage rates are now starting to fall, the size of the deposit remains the biggest challenge for most buyers. A permanent guarantee scheme could bring much-needed consistency to the market and give both lenders and borrowers greater confidence.”
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More Access, More Confidence — But Will It Drive Demand?
This permanent change is expected to help sustain buyer confidence at a time when affordability remains tight. It also arrives amid signs of easing mortgage rates, creating an improved lending environment across the board.
However, with demand likely to increase, experts are watching the supply side closely. If more buyers enter the market and housing stock doesn’t keep pace, there’s potential for upward pressure on prices. That could limit affordability in the long run — even as access to borrowing improves.
As ever, the full impact will depend on wider economic conditions, lender uptake, and how quickly homebuilders respond to renewed buyer activity.
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