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The Chancellor of the Exchequer Rishi Sunak has announced that lenders who offer mortgages to people who can only afford to pay a five percent deposit will have that mortgage backed by a government guarantee.
Sunak said this move would be 'a policy that gives people who can't afford a big deposit a chance to buy their own home'.
He said: "Even with the stamp duty cut, there is still a significant barrier to getting people on the housing ladder - the cost of a deposit.
"So, I'm announcing today a new policy to stand behind homebuyers: a mortgage guarantee."
Sunak acknowledged that low deposit mortgages have all but disappeared from the market, with only eight products available in the UK in January 2021.
He announced that Lloyds, Natwest, Santander, Barclays and HSBC are already on board, and said he hopes that more will follow.
The stamp duty cut has also been extended by three months, with the £500,000 nil rate band set to end on 30 June.
The nil rate band will still be double its usual level at £250,000 until the end of September, returning to the usual rate of £125,000 from 1 October.
Sunak said he wanted to focus on 'support, honesty, and building the UK's future economy' in his most recent budget and use the UK's 'fiscal firepower' to support the UK as we emerge from the pandemic, according to an earlier statement from HM Treasury.
Sunak said: "First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis.
"Second, once we are on the way to recovery, we will need to begin fixing the public finances - and I want to be honest today about our plans to do that.
"And, third, in today's Budget we begin the work of building our future economy."
That support includes extending the current furlough scheme until September, with employers making increased contributions to the wages of furloughed employees starting at the end of June, and increasing support for self-employed people.
He added: "Our Covid support schemes have been a lifeline to millions, protecting jobs and incomes across the UK.
"There's now light at the end of the tunnel with a roadmap for reopening, so it's only right that we continue to help business and individuals through the challenging months ahead - and beyond."
He also revealed that maximum contactless payments would be increased to £100 - above the European Union limit of £45 - allowing for easier transactions and attempting to boost the UK's ailing retail sector as it reopens.
The Chancellor said: "As we begin to open the UK economy and people return to the high street, the contactless limit increase will make it easier than ever before for people to pay for their shopping, providing a welcome boost to retail that will protect jobs and drive growth across the UK."
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