Help to Buy mortgage guarantee: one year on

A year on from the implementation of the government’s Help to Buy mortgage guarantee scheme (HTB2), industry leaders say the scheme is a success.

Data from Mortgage Advice Bureau (MAB) shows that the scheme has allowed buyers with smaller savings pots to access the property market and purchase affordable homes.

MAB says consumers are using the scheme to its full potential:  the average loan-to-value (LTV) for the mortgage guarantee scheme in August was 94 per cent, significantly higher than the market average of 72 per cent and just 1 per cent below the scheme’s maximum LTV of 95 per cent.

As a result, the average deposit for a Help to Buy 2 application in August was just £9,229: 87 per cent lower than the market average of £69,235.

The average HTB2 property price in August was £159,527: 31 per cent lower than the market average (£231,306).

The typical primary income of a HTB2 applicant was £32,745 in August: 19 per cent lower than the market average of £40,588 but still 24 per cent higher than the UK average wage (£26,500).

Mortgage Advice Bureau spokesman Brian Murphy comments:

“With average HTB2 deposits totalling less than £10,000 in August, the scheme has made home ownership possible for many first-time buyers who otherwise would not have been able to buy in an environment of rising rents and increased house prices.

“Crucially, it has also normalised higher loan-to-value (LTV) lending, encouraging even those lenders who have not participated in the scheme to expand their 95 per cent mortgage offering. This brings greater product choice to consumers and allows more affordable options to take centre stage.”