It seems as though the government’s Help to Buy mortgage scheme has been a saving grace for many. According to recent figures, it’s responsible for 16% of the annual growth in first-time buyer loans between October 2013 and March 2014, the latest Genworth/Moneyfacts mortgage LTV tracker report suggests.
While the mortgage guarantee loans provided under the programme accounted for just 3.9% of total market activity in the period, it played a crucial role in attracting first-time buyers back to the market. The scheme also had a positive impact on the mortgage industry as a whole, helping protect high loan-to-value (LTV) products from falling numbers and increasing interest rates, the report claimed.
During the initial six months after the launch of Help to Buy, the number of first-time buyers was 35,700 higher than the same period a year earlier as the mortgage market continued to build momentum. Those buying property using the scheme accounted for 16% of the total, meaning that one in six of those extra buyers backed their purchase with a 5% to 15% deposit under the programme.
The figures contradict popular opinion that Help to Buy has “flooded the market” and implies that it produces the results it was meant to achieve, commented Simon Crone, vice president of Mortgage Insurance Europe at Genworth. The scheme is responsible for a small share of total first-time buyer activity; its main role is to encourage and give hope to those who struggle to find the required deposit but who earn enough to cover repayments and pass affordability checks, he said.
If you’re a first-time buyer, does the Help to Buy scheme encourage you to jump on the property ladder?