James O'Brien's response to the Government's 5% mortgage deposit scheme

19 April 2021, 14:44 | Updated: 19 April 2021, 18:07

By Sam Sholli

James O'Brien has expressed doubt over the merit of the Government's new 5% mortgage deposit scheme.

The Government-backed mortgage scheme seeks to help first-time buyers or current home owners secure a mortgage with just a 5% deposit to buy a house for up to £600,000.

The scheme will see lenders offered the guarantee they need to provide mortgages that cover the other 95%, subject to the normal affordability checks.

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

Reflecting on the topic of property ownership, James said: "If you increase demand by making it easier to borrow money without increasing supply then all you're really doing is doubling down on the artificial inflation which is in many ways responsible for a lot of the financial problems that our country and our younger generations currently face."

He continued: "I haven't crunched the numbers completely but I think the interest rates that these people will be...required to pay would involve it costing more money to borrow than it does the owners of Arsenal and Manchester United."

James also said that he finds the presumption of property ownership has gone for the people in their 20s and 30s that he speaks to, from a background comparable to his.

Housing Secretary Robert Jenrick has said: "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."

Mr Jenrick added: "Together we can turn Generation Rent into Generation Buy."