Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB), comments on the DCLG’s latest Help to Buy equity loan and mortgage guarantee statistics:
“The Help to Buy scheme has successfully boosted confidence among first-time buyers and enabled 48,393 properties to be purchased to date. 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% loan-to-value (LTV) lending to consumers in the current market.
“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. The latest data from our National Mortgage Index shows consumers using the equity loan scheme in July had an average age of 32.2 (compared to 36.3 in the wider market) and borrowed just £140,138. This is well below the market average, so claims that the scheme is helping wealthy homeowners have been well and truly debunked.
“Lloyds recently imposed a £150,000 limit on its Help to Buy equity loan (HTB1) lending, but with the average HTB1 borrower taking a mortgage 7% lower than this, there wouldn’t be too much of an impact should other lenders follow suit.
“The scheme still has a vital role to play in today’s market and now is not the time to pull the rug from under first-time buyers’ feet. Affordability remains a key concern, and schemes such as Help to Buy are crucial in enabling buyers who are unable to save for hefty deposits to achieve their homeowning aspirations. There remains ample room for more lenders to put their weight behind the scheme and help to improve the options for consumers.”