View more on these topics

MS Leader: Help to Buy success or fantasy?

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.

Recommended

Montlake Andrew MS blog 150

Marketwatch

There are quite a few candidates for villain this week but Help To Buy could prove to be a hero if the massive gamble pays off.

Jon-King-60-seconds-with.jpg

60 Seconds with… Jon King, managing director of More 2 Life

Last year More 2 Life launched its Interest Choice Plan to help retirees on interest-only mortgages – what has the take up been? The take up has been excellent which comes as no surprise given the potential size of the market with around 103,000 retired households still paying mortgages. We designed the product following feedback […]

Newsletter

News and expert analysis straight to your inbox

Sign up