Back in February’s budget meeting, Chancellor Rishi Sunak first outlined the mortgage guarantee scheme which is designed to make mortgages more accessible and affordable to first time buyers.

The scheme launched this month and it is available to current home-owners as well as first-time buyers- but is it beneficial to the average Greater Manchester buyer? Our figures suggest not.

Under the scheme, buyers can put down just a five per cent deposit on a house and it will also provide a guarantee to lenders across the UK who offer these low deposit mortgages to buyers.

Here’s everything you need to know about the scheme- including the average salary you will need to afford one in Greater Manchester.

What is the mortgage guarantee scheme?

The mortgage guarantee scheme is available to current home-owners as well as first-time buyers looking for a property for up to £600,000.

The scheme will provide a guarantee to lenders across the UK who offer mortgages to people with a deposit of just 5 per cent.

The mortgage guarantee scheme will encourage lenders to offer 95% mortgages, making home ownership more accessible to those with a smaller deposit.


Buyers will have the option to fix their initial mortgage rate for at least five years, giving them certainty over their repayments.

However, there is a slight catch with the scheme as the smaller deposit means that you will have to borrow more- and will also need to have a higher annual salary to afford the pricier homes.

There are also concerns that the scheme could only add to the issue of rising house prices, making homeownership less attainable in the coming months.

‘The scheme will have the greatest benefits for buyers in lower value housing markets’

Richard Donnell, research director at Zoopla said  supporting buyers with small deposits is key to widening access to home ownership for a part of the mortgage market that has been under-served.

However, it will benefit people in Northern England much more than the south. 

He added: “Our analysis shows the scheme will have the greatest benefits for buyers in lower value housing markets in northern England and Scotland, where a 95% mortgage is more attainable.

“The scheme will have less impact for buyers in southern England, where high house prices are a major barrier to being able to afford a 95% mortgage. This all supports the levelling up narrative and policy approach of Government.”

Will the 95% mortgage guarantee scheme help first-time buyers in Greater Manchester?

Quittance legal service have crunched the numbers to see exactly how much a first-time buyer would have to save for a five per cent deposit on a house- as well as the average salary you would need to earn.

The numbers are based on standard mortgage affordability criteria and the latest HM Land Registry data (Jan 2021) figures of the average price of a first-time buyer property.

Chris Salmon, Operations Director for Quittance Legal Services said:

"Lenders' affordability criteria will still mean that low earners in many more expensive parts of the country will still struggle to get a mortgage, even with a 5% deposit"

"As we've seen with the Help to Buy and the recent Stamp Duty holiday, the scheme could also contribute to rising property prices, keeping home ownership out of reach for more people in the future."

The average 5% deposit for people in the North West is £7,754 and the average income needed is £32,741.

These figures are the third lowest in England, Scotland and Wales.

In Greater Manchester specifically, the average first time buyer house price right now is £165, 388.

The average deposit that a first-time buyer needs for a 95% mortgage in Greater Manchester is an affordable £8,269.

However, in order to qualify for this type of mortgage you will need an average annual salary of £34,915 per year.

This figure is a whopping 22 per cent higher than the region’s median salary meaning the 95% deposit isn’t necessarily attainable for the average buyer in the county.

It’s important to note that these figures only apply to the average house price in Greater Manchester- the average salary needed for a five per cent deposit on pricier homes will be much higher.

Do you think the 5% deposits are a good thing?