UK Chancellor Jeremy Hunt plans to introduce a mortgage market scheme called "Help to Buy," aimed at attracting young voters. Under the scheme, borrowers can access mortgage loans of up to 99% loan-to-value ratio, the highest since the global financial crisis. While similar to previous "Help to Buy" schemes, this time the government will provide a certain level of support.

However, the scheme has sparked some controversy and concerns. On one hand, supporters believe it will help young people with insufficient savings to achieve their dreams of homeownership. For many young people, the down payment is one of the biggest obstacles to buying a home, so this scheme will provide more opportunities for them to own their own homes. On the other hand, critics worry that such a scheme may lead to further housing price increases and increase market instability.

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Arjan Verbeek, CEO of Perenna, believes that by combining this scheme with Long-Term Fixed-Rate Mortgages (LTFRM), risks associated with high loan-to-value ratios can be mitigated. LTFRMs will allow borrowers to take on more debt because the repayment amount is fixed. However, this also requires adjustments and updates to regulations to ensure borrowers do not become overly indebted.

Furthermore, some critics are concerned that the scheme may encourage speculative home buying, leading to further price increases. They argue that the government should focus more on increasing the supply of housing to address supply-demand imbalances. Only by providing enough housing choices can true market competition be achieved, thereby keeping house prices at reasonable levels.

Another issue worth noting is that if house prices fall, many homebuyers may face negative equity risks. In such a scenario, taxpayers may have to bear the burden of loan defaults. Therefore, before launching such a scheme, the government must carefully assess and manage potential risks and take appropriate measures to protect the interests of borrowers and taxpayers.