Extension of Freedom to Buy will help some first time buyers, but only “if they can afford a bigger mortgage”, according to the Institute for Fiscal Studies.

The Labour Party has pledged to make the current government mortgage guarantee scheme permanent if it wins the general election, as part of its “Freedom to Buy” scheme.

The existing scheme, which is due to end on June 30 2025, allows mortgage lenders to purchase insurance against a portion of the losses they incur in the case of borrower default.

In response, the IFS pointed out that the mortgage guarantee scheme makes it easier for lenders to offer high loan-to-value mortgages with lower deposit requirements.

That could, therefore, reduce one important barrier to homeownership for some young people: the deposit.

However, it cautioned that, to be able to take advantage of 95 per cent LTV mortgage, a potential borrower also needs to have an income high enough to secure a mortgage of this size and to be able to afford the repayments.

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