The scheme was designed to allow more first-time buyers to get on the property ladder with a small deposit of 1% with the government offering banks financial guarantees to encourage them to hand out mortgages covering the other 99% of the property value.

However, it was recently and quietly scrapped before it was to be announced in the 2024 Spring Budget.

The scheme’s axing has been welcomed by several mortgage brokers, suggesting it would have inflated housing prices and made borrowers susceptible to negative equity if property value declines as well as higher monthly payments or longer-term mortgages.

Commenting on the development, Jonathan Bone, mortgage lead at Better.co.uk, said: “The allure of a 99% mortgage is undeniable – it offers a swift entry onto the property ladder for renters, eliminating the need for years of saving for a hefty deposit.

“Moving from renting to owning opens up doors for first-time buyers who have the opportunity to build equity in their home, potentially turning a profit as property values increase, unlike waving goodbye to your money when renting.

“Initially, the government hinted at backing part of the loan, which would have helped to mitigate lenders’ risk, making it more enticing for them to participate. However, there are significant drawbacks to mortgages with minimal deposits.

“They tend to come with higher interest rates, making borrowers susceptible to negative equity if property values decline.”