The total number of properties bought using mortgages under the second part of the Help to Buy scheme has reached 7,313 according to the latest Treasury figures.
It was first-time buyers, who accounted for 80 per cent of the purchases through the mortgage guarantee scheme, who benefited most, while only 5 per cent of the total properties were bought in the capital, with the South East accounting for 14 per cent.
There has been less widespread support for the second part of Help to Buy, which assists buyers in taking out a mortgage with just a 5 per cent deposit, than there has been for the equity loan element, which provides access to loans for new build properties.
Figures show that the equity loan scheme has also proved to be more successful than mortgage guarantee, with the former accounting for 20,548 new homes sold in England in the 13 months since it began.
Therefore, 27,861 homes have now been sold under the two parts of Help to Buy.
Impact
The combined impact of both the Help to Buy equity loan and mortgage guarantee schemes does not appear to be creating an amplifying effect on the more active parts of the UK housing market, according to the Council of Mortgage Lenders (CML).
By value, 45 per cent of properties bought involving a Help to Buy mortgage guarantee were for properties costing up to £125,000. Only 7 per cent of Help to Buy transactions were for properties costing over £250,000.
Opinions
Commenting on the new data, CML director general Paul Smee said: “Broadly, we should be reassured by the latest data on Help to Buy. The policy appears to be reaching the geographical parts of the market where recovery has been weakest, while accounting for only a small proportion of business in those areas where the market is more active. On the basis of these figures, the scheme appears to be successfully reaching its target group of creditworthy borrowers who would otherwise be unable to buy until they had accumulated a more significant deposit. Lenders are always mindful of what their customers can afford.
“Throughout the UK, the proportion of business accounted for by Help to Buy has to date been modest overall. Any worry that the scheme risks stoking a housing boom fortunately does not seem to be playing out in practice so far.”
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), comments: “The finger of blame has often been pointed at Help to Buy for causing significant house price increases in London, but this rumour can finally be put to rest: only 5 per cent of completions took part in London, with most buyers using the scheme purchasing in the North West and the East.
“Removing the mortgage guarantee in the hopes of driving down activity in the South would be both unnecessary and unsuccessful. Lending activity has generally slowed since 2013 and new mortgage rules putting strict affordability conditions into play will ensure sustainable growth. Those hoping to dampen activity in London would be better off targeting the external factors that have such a strong influence on the capital’s housing market, such as the rise in cash buyers and the shortage of new homes.”
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