The UK Treasury should put pressure on the Bank of England to bring back 95% mortgages and help first time buyers, the Scottish Conservative leader said.
Ruth Davidson called on her party colleagues in London to find a way to make the mortgage sector recover from the banking crisis so people are able to realise the “dream” of getting themselves on the property ladder.
Ms Davidson said she was “proud” of the Tories’ record on home ownership, particularly allowing people to buy their council houses, and described her new proposal as a “bold step.”
She said: “I believe it’s unacceptable for so many of our fellow citizens to face the prospect of a life excluded from the property-owning society.
“Yes, part of the problem is not enough house building, but the underlying problem is the mortgage market has not recovered from the banking crash.
“Six years on from the Northern Rock crisis, borrowers continue to face a mortgage crunch, and it remains incredibly tough for first-time buyers to get a home loan.
“It is obviously right that banks are stopped from selling mortgages to people who can’t afford to make the monthly payments.
“But it is wrong that mortgages are no longer available to people who can afford to make the monthly payments, but who suddenly as a knock-on effect of irresponsible bank lending in the past are required to have at least a 20 or 30% deposit instead of a 5% deposit.”
She added: “That’s why I am calling on the UK Treasury to do more with the Bank of England to come up with a way to bring back affordable, 95% mortgages.
“Such deals are still common in other countries like the US, Canada and Australia, so why can’t they return here?
“I don’t want to encourage people to take on loans they can’t afford, but lending with small deposits has been an important part of our mortgage market for a long time.”
Ms Davidson who said the Scottish Government’s national mortgage indemnity does not go far enough has been in contact with David Cameron and George Osborne over her proposals.
She also proposed to cut income tax by 1p and extend free nursery provision to the most disadvantaged two-year-olds.
To pay for the nursery policy, she later suggested reviewing funds for tuition fees, council budgets, eye tests and concessionary bus travel.
Young people are now facing an “age of anxiety” as well as austerity, which she said can be tackled by restoring “faith” in those traditional values.