Boris Johnson is planning to get more prospective homeowners on the property ladder by offering lower deposits to help with affordability.
The Prime Minister, who spoke exclusively to The Telegraph, has asked ministers to work on plans to allow more mortgages to be offered with a 5% deposit to lower the average of 15 – 20%.
With these plans, Boris Johnson hopes to create ‘Generation Buy’ with more young people being able to get onto the housing ladder.
Banks would also no longer be required to ask applicants about the finer details of their earnings and outgoings, which hopes to allow around 95% of loans to be accepted.
The government would also take on some of the loan risk in the form of a state guarantee, according to the new proposals.
Boris Johnson said to The Telegraph: “A huge number of people feel totally excluded from capitalism, from the idea of home ownership, which is so vital for our society.
“And we’re going to fix that — Generation Buy is what we’re going for.
“We need mortgages that will help people get on the housing ladder even if they have only a small amount to pay by way of deposit.
“It could be absolutely revolutionary, particularly for young people.”
Polly Neate, chief executive of Shelter, believes that the Prime Minister is out of touch with reality and needs to refocus.
Neate said: “Average house prices are now eight times the average salary in England, meaning most people cannot afford to take on a 95% loan.
“Many of those who’ve seen their incomes decimated during this pandemic are young people and families in desperate need of a stable home – buying is just not an option for them.
“You have to question whether the Prime Minister is in touch with reality, he is talking about giant mortgages at a time when more than 320,000 private renters have fallen behind on their rent as a result of COVID-19.
“Offering up huge loans and even more debt is the wrong answer to the much bigger problem of rising housing insecurity in this country.
“The Prime Minister needs to stop selling pipe-dreams and start facing reality.
“The only way we will make a dent in the housing emergency is by increasing the number of secure and genuinely affordable homes, and that means building decent social housing.”