Published: Wednesday, August 27, 2025 · 12:09 PM | Updated: Wednesday, August 27, 2025 · 12:09 PM
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The UK government’s Mortgage Guarantee Scheme has had little impact in getting people on the housing ladder, as after four years the support has only reached slightly over 56,000 buyers across the entire country, less than 2% of all mortgages in that same period.
The scheme, launched in 2021, was designed to help first-time buyers secure home loans with smaller deposits, and was hailed as a lifeline for homebuyers struggling to gather the typically required 10% deposit.
The programme allows buyers to secure loans with as little as 5% down, with the government guaranteeing lenders on the top 95% of the mortgage in the event of repossession. In theory, the scheme should have been a tool for helping people who otherwise would have been locked out of the market.
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However, the scheme has supported just 56,389 mortgages between April 2021 and March 2025 according to the data from HM Treasury, with 86% of those benefiting being first-time buyers.
That is 1.4% of the total UK new mortgage market over the past four years.
A closer look at the data shows the scheme’s limitations. The average property value of homes bought under the scheme is £215,467, below the UK’s national average house price of £271,000. This discrepancy makes it difficult for the scheme to support buyers in more expensive parts of the country, given that the property market in regions like London and the South East has continued to outperform more affordable areas.
The regional breakdown shows that the scheme has benefitted lower-priced properties, with nearly half of all completions falling under the £200,000 mark. Only 12% of mortgages supported by the scheme were for properties valued above £250,000.
Holly Tomlinson, a financial planner at Quilter, said that the data shows a “lacklustre impact,” which raises doubts about the scheme’s future effectiveness.
“The latest Mortgage Guarantee Scheme statistics show the lacklustre impact the scheme has had so far, and just how ineffective the government’s permanent version of the scheme is likely to be,” Tomlinson said.
She explained that the scheme’s slow uptake is particularly concerning as it has failed to meet the housing market’s most urgent needs: affordability and supply.
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“Since its launch in April 2021, the scheme has supported a total of 56,389 mortgages, 86% of which were by first-time buyers,” Tomlinson added. “Mortgage completions supported by the scheme have been tailing off since it first launched, and while there seemed to have been a slight uptick in previous quarters which may have been driven by more people trying to push through completions ahead of the changes to stamp duty, the take-up has still been relatively low.”
Tomlinson raised concerns that the scheme’s design does not adequately address the wider housing supply issues that undercut affordability in many parts of the country, particularly the South East and London, where demand outstrips supply.
“What’s more, the average property value under the scheme was £215,467, significantly below the national average house price of £271,000, which raises questions about the scheme’s ability to cater to those in more expensive parts of the country,” she said.
Beyond the scheme itself, Tomlinson warned that potential new tax reforms, including a shift to a proportional property tax or new levies on high-value sales, could further stifle the market. These ideas, which are rumoured to be being considered as part of the chancellor’s autumn budget, could create new obstacles for the housing market.
“While the government’s decision to make the Mortgage Guarantee Scheme permanent may help at the margin, it does not create homes or meaningfully lower borrowing costs,” she explained. “Without more supply and a clearer path on rates and taxation, the housing market could face a winter of discontent that drags into next year with even more people shut out.”
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She also warned about the potential risks associated with proposals to replace stamp duty with a proportional property tax. While Tomlinson said that stamp duty is a flawed system that has discouraged older homeowners from downsizing, she cautioned against reforms that could further restrict market fluidity.
“Stamp duty has long deterred older homeowners from downsizing, and any new tax must avoid further locking up family homes at a time of acute shortage,” she noted.
Similarly, the rumoured levy on properties sold above £500,000 could have unintended consequences. Tomlinson warned that this tax could capture more modest homes in expensive areas and upend the entire property ladder.
“Similarly, a levy on sales above £500,000 might sound like a tax on wealth, but in many regions it would capture ordinary homes,” she said. “Crucially, the housing market is a ladder, with every sale interlinked. If transactions higher up the chain are taxed heavily, it risks grinding the whole system to a halt, compounding the difficulties first-time buyers already face.”
Although the scheme was due to finish at the end of June, it was confirmed in Reeves’ spending review that it would be made permanent. This was to “ensure the consistent availability of mortgages for buyers with small deposits”.
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