The first three months of the Help to Buy mortgage guarantee scheme has seen more than 6,000 mortgage applications, Prime Minister David Cameron has announced.
This equates to 2,000 applications per month and if all 6,000 mortgages are approved it would represent nearly £1 billion of new lending to aspiring homeowners.
So far, nearly 750 homeowners have completed purchases under the Help to Buy mortgage guarantee scheme who may have previously found the property market out-of-reach because of the size of deposit required.
Barclays and Santander are about to introduce their Help to Buy mortgage guarantee products, joining Lloyds Banking Group, RBS, HSBC, Virgin Money and Aldermore. This means two-thirds of the UK mortgage market will offer products under the Help to Buy scheme.
New figures also show that an additional 20,000 households have been supported by the Help to Buy Equity Loan scheme, a separate scheme where the government provides an interest-free loan to support the purchase of the newly built home.
Homes bought under the Help to Buy scheme are worth on average £160,000 which remains below the UK average house price of £247,000.
Applicants will face average monthly repayments of around £900 and have an annual household income of about £45,000; this means a Help to Buy mortgage represents 23 per cent of borrowers’ gross income.
Around three-quarters of applications are from outside London and the South East, and over 80 per cent are from first-time buyers.
The large number of applications for Help to Buy mortgages suggests the high loan-to-value part of the mortgage market is once again moving. High LTV mortgages have been the main route to ownership for most first-time buyers over the last 30 years, but there have been fewer products available in recent years.
Prime Minister David Cameron said: “The New Year is often a time when people look to make those big life-changing decisions like moving home or taking that first step on the housing ladder.
“But too many people have found themselves frozen out of the market in recent years as a result of the size of the deposit required.
“That is why as part of our long-term economic plan we introduced the Help to Buy scheme, so hardworking people with sufficient earnings can get on, fulfil their aspirations and enjoy the security of owning their own home.”
Case study
Michael Williamson (34), his wife and three-year old daughter are first-time buyers and moved into their new home in Staffordshire in the middle of December.
Michael works for a loss adjustor and said: “Renting a house and paying all the bills came to over 75 per cent of my wage per month so saving for a deposit of 10 per cent or even 20 per cent was impossible.
“I wanted a more traditional house with a decent driveway, garden and some character. The new Help To Buy scheme was perfect for me because I could purchase a house with a much lower deposit of 5 per cent and the mortgage fees were much less.
“The amount I am paying for the new house will be less than I was paying in the rented accommodation.”
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