The big news in last week’s Budget was obviously chancellor George Osborne’s announcement of Help to Buy.
Will this be the answer to the housing and mortgage market’s collective woes?
Expectations for Help to Buy are high and the Government’s projections for both parts of the scheme are big.
The equity loan version of Help to Buy, with a £3.5bn funding limit, is expected to help 74,000 would be borrowers.
The figures are even bigger for the guarantee scheme – up to £12bn of guarantees to support £130bn of lending. On the basis of an average property value of £229,000, minus £11,000 for the 5 per cent deposit, gives you 590,000 odd mortgages. The scheme is open for three years, so 190,000 additional mortgages a year.
But the previous shared equity and mortgage guarantee schemes that the two versions of Help to Buy seem to replace have hardly set the world alight.
When the former housing minister Grant Shapps announced the NewBuy scheme he was talking about an additional 100,000 people using the scheme.
As of December last year 1,522 people had signed up to the scheme. With FirstBuy, since it was launched there have so far been around 6,500 completions. Underwhelming figures by anyones standards and make the Government’s predictions for Help to Buy seem a fantasy.
But the two versions of Help to Buy are bigger and broader than their FirstBuy and NewBuy forerunners, though the Government needs to work hard to remedy key problems like lenders’ ability to get capital relief from the guarantees.
If it can do that, if the products help second steppers move up the property ladder and first-time buyers on to the first rung then the Government will have a major success story on its hands.