The government-supported Help to Buy mortgage guarantee scheme has proven very effective for first-time buyers, the latest HM Treasury figures released today show. In the period of 15 months (from October 2013 till December 2014) there were 40,079 home purchases within the scheme with a total value of some £5.9 billion. A total of 88,420 people […]
The government-supported Help to Buy mortgage guarantee scheme has proven very effective for first-time buyers, the latest HM Treasury figures released today show.
In the period of 15 months (from October 2013 till December 2014) there were 40,079 home purchases within the scheme with a total value of some £5.9 billion.
A total of 88,420 people have benefited from the scheme since its launch in October 2013 till the end of last year. Of them 78 per cent, or 66,661 people, were first-time buyers.
The scheme was mostly used in England with 32,989 (or 82 per cent) of completions located there. Scotland accounted for 11 per cent of all completions (4,506), Wales for 5 per cent (1,869) and Northern Ireland for 2 per cent (709).
The large majority (94 per cent) of home purchases were done outside London. The South East (14 per cent of completions), the North West (14 per cent of completions) and the East (10 per cent of completions) were the most preferred regions to buy and the preferred types of housing were terraced (38 per cent of buys) and semi-detached houses (35 per cent of buys).
Most households who used the Help to Buy scheme had a household income between £20,001 and £50,000. A very small proportion (9 per cent) of mortgage completions within the scheme were made by households with an average income over £80,000.
The average value of the homes purchased via Help to Buy was £185,000, which is well below the national average house price of £272,000.
Help to Buy scheme key facts:
►The Help to Buy: mortgage guarantee scheme opened on 8 October 2013 and is available across the United Kingdom. Under the scheme the government offers lenders the option to purchase a guarantee on mortgage loans where the borrower has a deposit of between 5 per cent and 20 per cent.
►The scheme can be used for mortgages on both new build and existing homes, by first-time buyers, home movers and those remortgaging.
►In order to qualify for a loan supported by the Help to Buy: mortgage guarantee, there are a number of eligibility criteria which are set out in the scheme rules. For example, the scheme is not available on buy-to-let mortgages or second homes, and the property value must be £600,000 or less. Since 1 October 2014, no new loans with a loan-to-income ratio of 4.5 and above can be included in the scheme.
►The guarantee compensates participating mortgage lenders for a portion of net losses suffered in the event of repossession. The guarantee applies down to 80 per cent of the purchase value of the guaranteed property covering 95 per cent of these net losses. The lender therefore retains a 5 per cent risk in the portion of losses covered by the guarantee. This ensures that the lender retains some risk in every mortgage originated.
►Over the life of the scheme the government will make available up to £12 billion of guarantees, which is sufficient to support up to £130 billion of high loan-to-value (LTV) mortgages.
