Buy-to-let
More than 48,000 people have bought a home through the government’s Help to Buy schemes – and 82 per cent of them, or almost 40,000, were first-time buyers.
The average house price for both parts of the scheme is £187,800, well below the national average of £265,000. Ninety-four per cent of Help to Buy completions have been outside of London.
However Help to Buy continues to account for only a small percentage of overall mortgage transactions (2.5 per cent for mortgage guarantee and 4 per cent for equity loan).
So far 18,564 mortgages have been completed with the Help to Buy (mortgage guarantee) scheme, which launched in October 2013, compared to 29,829 properties completed through Help to Buy (equity loan), which launched in April 2013.
Seventy-nine per cent of purchases under the Help to Buy (mortgage guarantee) scheme were by first time buyers compared to 85 per cent of Help to Buy (equity loan) purchases.
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), says the figures show Help to Buy has boosted confidence among first time buyers.
“Despite having launched six months later than the equity loan scheme, the number of completions using the mortgage guarantee is catching up fast, which shows the importance of 95 per cent loan-to-value (LTV) lending to consumers in the current market.”
And claims that the scheme is helping wealthy homeowners have been “well and truly debunked”, he says.
“Both parts of the Help to Buy scheme have assisted younger, less affluent buyers who are using the scheme to purchase affordable rather than extravagant properties.”
Simon Crone, vice president of Mortgage Insurance Europe for Genworth, says: “The bulk of [Help to Buy] activity remains focused on low-cost purchases, which should dispel the myth that the scheme is encouraging consumers to overstretch their budgets.
“Nevertheless, it is a major concern that wider access for first time buyers has relied on a temporary fix to lending disincentives currently hardwired into the market.
“We have only just begun to address the dual supply shortages of high loan to value (LTV) mortgages and new homes, and are still a long way from making major inroads into the backlog of frustrated, creditworthy buyers.
“Help to Buy proves that it is possible to offer prudent loans with affordable deposits and prompt higher rates of house-building. It must now become a platform to a permanent market-driven solution that sustains this progress and can support first time buyer access while maintaining financial stability.”
