Chancellor Jeremy Hunt is expected to prolong the mortgage guarantee scheme for an additional year to assist those grappling with rising mortgage rates, as part of the Autumn Statement scheduled for next month.

It is understood that the Treasury is exploring the possibility of extending the scheme, which enables individuals to secure a mortgage with a 5% deposit, for another 12 months.

The mortgage guarantee scheme, initially introduced in March 2021 by the then Chancellor Rishi Sunak, was devised to incentivise lenders to offer mortgages to borrowers with a smaller deposit. However, mortgage rates have subsequently surged, while many individuals are contending with the mounting cost of living.

According to The Sunday Times, the Treasury is also assessing options for a new type of ISA aimed at encouraging people to save for their first home.

Previous ISAs, such as Help to Buy, launched in 2015 under former Chancellor George Osborne and concluded on 31 March, faced criticism as property prices exceeded the scheme's limits.

Under the scheme's regulations, buyers received a 25% government bonus on homes valued at up to £250,000 in England and £450,000 in London.

Hunt is also contemplating the possibility of raising the upper limit to £450,000 for house purchases funded by a Lifetime ISA, where the government contributes 25% to savings earmarked for a deposit, although no final decision has been reached.

The Chancellor is scheduled to unveil the Autumn Statement on 22 November.

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