In a bid to give would-be homeowners a leg up onto the property ladder, the Tories introduced the mortgage guarantee scheme, which essentially underwrites potential losses for a lender offering a mortgage of 95pc of a property’s value.
The scheme has been used by around 40,000 buyers since its inception in 2021.
In December, Chancellor Jeremy Hunt extended it until June next year and Labour has promised to keep it in place if it wins the July general election.
However, increased mortgage rates mean that those using the scheme may be able to get on to the ladder but struggle with the monthly costs.
High interest rates meant that mortgage guarantees in 2023 ran at just 35pc of the 2022 average, according to Hamptons.
Completions under the scheme are only around 15pc of the level that the Help to Buy scheme achieved.
Prime Minister Rishi Sunak has pledged that a new Conservative government would revive the scheme with it running for another three years. It offers first time buyers of new builds a 20pc interest-free government loan for the five years.
The average price of property coming to the market for sale dropped by just £21 in June (0.0pc) to £375,110 after reaching a record high in May, according to Rightmove.
Tom Bill, of Knight Frank, said: “Overall, mortgage rates are unlikely to fall meaningfully any time soon and that, together with a degree of political uncertainty, is keeping demand in check.
“Ironically, it has rarely been a better time to be a buyer in recent years.”
Despite slowing house price growth, prospective homeowners find themselves at the sharp end of an affordability crisis.