Help to Buy picking up steam

Help to Buy is gaining greater traction as new figures show the scheme has been responsible for 6.6 per cent of all house purchase transactions since April 2013 – up from 4 per cent in May. 

Treasury figures, published today, show there have been 48,393 completions (from both parts of the scheme) since the Help to Buy equity loan scheme launched in April 2013. Over the same period there have been a total of 731,500 house purchase transactions, according to the Treasury.

Some 29,829 new-build homes have been purchased through the equity loan scheme (Help to Buy 1) and a further 18,564 properties bought using a mortgage guarantee through Help to Buy mortgage guarantee scheme, which launched in October last year.

First-time buyers account for the vast majority of transactions through Help to Buy, with 85 per cent of Help to Buy 1 and 85 per cent of Help to Buy 2 borrowers purchasing their first home using the schemes. 

The average purchase price through Help to Buy 1 so far is £209,390, while borrowers using Help to Buy 2 have paid an average £153,148. The mean purchase price across the entire Help to Buy scheme therefore stands at £187,815, some 21 per cent below the market average of £265,000.

Incomes between those borrowers using the scheme and those who are not are less varied. The average income for Help to Buy borrowers stands at £42,482, while the market average is £43,000.

Just 6 per cent of all transactions through the Government initiatives have been in London, while the South East region has seen the most completions at 7,501.

Chancellor George Osborne says: “It’s great to see that nearly 40,000 first-time buyers have been helped onto the housing ladder by the Help to Buy scheme. Importantly, Help to Buy is also driving a big increase in house building in Britain, boosting the construction industry and increasing housing supply.”

Genworth vice president for mortgage insurance Europe Simon Crone says: “Today’s figures show Help to Buy is scoring a direct hit with its intended target by supporting first-time buyer at the lower end of the property market.

“Nevertheless, it is a major concern that wider access for first time buyers has relied on a temporary fix to lending disincentives currently hardwired into the market. We have only just begun to address the dual supply shortages of high LTV mortgages and new homes, and are still a long way from making major inroads into the backlog of frustrated, creditworthy buyers.”

Help to Buy was the flagship policy of last year’s Budget and aims to boost the availability of 95 per cent loan to value mortgages. 

The scheme works in two parts; the first part came into effect in April as a shared equity scheme for new build homes. The second part, a £12bn mortgage indemnity scheme with the potential to support up to £130bn of lending, which was first revealed by Mortgage Strategy in February last year, came into force in October for all properties worth up to £600,000.