spiring homeowners seeking deposits as low as 5 per cent will find more deals available from today, as a new UKGovernment-backed mortgage scheme gets under way.

Lloyds, Santander, Barclays HSBC UK and NatWest will be among the first to launch mortgages under the scheme, with Virgin Money following next month.

The scheme, unveiled in the Budget earlier this year, is being made available to lenders from Monday.

It comes after the number of low deposit mortgages on the market shrank dramatically in the early days of the coronavirus pandemic, as lenders became much more cautious about offering “riskier” loans in the tough economy.

The new initiative will tackle this by helping first-time buyers or current home owners secure a mortgage with just a 5 per cent deposit to buy a house for up to £600,000.

It will work by offering lenders the guarantee they need to provide mortgages that cover the other 95 per cent, subject to the usual affordability checks.

The UK Government said that when asked,  69 per cent of private renters who had looked into a mortgage said they could not find many deals with a low deposit.

Housing Secretary Robert Jenrick said: “For too many people, no matter how hard they work, home ownership can seem out of reach. One of the biggest divides in our country has been between those who can afford their own home and those who cannot.

“That’s why we are determined to do everything we can to help hard-working families and prospective first-time buyers get their feet on the housing ladder in an easy and affordable way, to level up this country.

“The new mortgage guarantee scheme which comes into effect today will give providers the confidence to lend and help families and young people get on the property ladder without the prohibitive burden of a large deposit.”

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