A permanent mortgage guarantee scheme aims to help first-time buyers, but experts question whether it tackles the real barriers to homeownership
Freedom to Buy has split experts on whether this will help people get on the property ladder(Image credit: Getty Images)
Chancellor Rachel Reeves has confirmed the launch of Freedom to Buy, a permanent mortgage guarantee scheme aimed at helping people buy homes with 5% deposits.
“We must restore the dream of homeownership for working people,” Reeves said ahead of her Mansion House speech, framing the policy as part of Labour’s broader plan to improve financial security.
But with high mortgage rates and house prices outpacing wages, experts are divided on whether the move will make a real difference.
A lifeline for some buyers
The scheme helps buyers secure 95% mortgages by having the government share lender risk(Image credit: Getty Images)
The scheme, first introduced temporarily by the Conservatives in 2021, enables buyers to take out 95% loan-to-value (LTV) mortgages with the government covering part of the risk.
Lenders pay a fee to the Treasury in exchange for the guarantee, which is meant to give them the confidence to continue offering high-LTV products even during downturns.
Some lenders and housing bodies welcomed the move, suggesting it could prevent the sharp withdrawal of low-deposit products in tough economic periods and smooth out access over the long-term.
Expert concerns about affordability and impact
Despite the policy’s intentions, many mortgage experts and brokers remain skeptical about its effectiveness.
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“Every lender who wanted to offer a 95% loan is probably already doing so,” said Peter Stimson, director at MPowered Mortgages, adding that the scheme may shift risk but won’t lower costs when buying a house.
Critics, including mortgage brokers like Martin Stewart of London Money argue that the scheme addresses access to credit but not the core affordability issue - with rising house prices, high monthly payments, and a shortage of new homes continuing to lock out many buyers.
Is the missing piece housing supply?
While the scheme may help with high mortgage rates, analysts warn that it won’t meaningfully change the market unless paired with a broader strategy to increase housing supply.
The Building Societies Association and other industry voices have urged the government to follow through on its pledges to accelerate housebuilding and reform planning rules.
Without more homes being built, experts suggest Freedom to Buy could inflate demand without solving the structural shortage - keeping ownership out of reach for many.
News Editor Joseph has previously written for Today’s Media and Chambers & Partners, focusing on news for conveyancers and industry professionals. Joseph has just started his own self build project, building his own home on his family’s farm with planning permission for a timber frame, three-bedroom house in a one-acre field. The foundation work has already begun and he hopes to have the home built in the next year. Prior to this he renovated his family's home as well as doing several DIY projects, including installing a shower, building sheds, and livestock fences and shelters for the farm’s animals. Outside of homebuilding, Joseph loves rugby and has written for Rugby World, the world’s largest rugby magazine.
