Mortgage industry reacts to Help to buy rumours

Following yesterday’s reported speculation over the future of the Help to buy scheme, Mortgage Strategy sought the views of some key voices in the industry on if they believe that HTB has been a success, and what its future may look like.

“Clarity is required on how Help to buy is going to look beyond 2021 and with the autumn budget looming that would seem a logical opportunity for the government to announce its intentions.

“While the basic principles remain sound and provide opportunities for brokers and participating lenders to attract new business, Help to buy may well need some refining so that support is being directed to where it is needed the most.

“Confirmation of any changes or extensions to the scheme would be welcomed as quickly as possible. Housebuilders have to know so their own development plans are aligned, but potential borrowers also need to have an understanding as well. It will be beneficial for them to know exactly what additional support is going to be available in the future to allow them to plan accordingly.”

Richard Scott, West Brom

“There have been some stories over the weekend, but I suspect that it’s just speculation. I’m not sure the housing, communities and local government committee has shared anything at this point. We’re probably going to hear something in the autumn budget.

“I would say that without a doubt the scheme has been a huge success. Quarter-on-quarter, the use of Help to buy is increasing and so becoming an even bigger part of the new-build market. It’s clearly needed if the government is to hit its 300,000 new homes in England alone by the mid-2020s… I would think that housing is such a high priority for the government that I can’t see it being withdrawn.

“There is a place for Help to buy for those moving house. For example, for those who bought a new-build started home a few years ago and have since gone on to have children. However, I can see there being some further criteria added in future… to make the scheme more targeted.

“There’s no question that Help to buy has boosted the new build market. The mortgage market is in a far healthier position now than it was five years ago.

“We may have to start weaning ourselves off the scheme. At the moment it feels semi-permanent, and housebuilders will need to know what’s going on, so they can incorporate it into their future plans.”

Craig Hall, Legal and General Mortgage Club

“There is still considerable appetite for Help to buy among first-time buyers. Their greatest barrier to getting on the housing ladder is getting a deposit and that’s what this government programme has effectively enabled first-time buyers to do. Importantly, once first-time buyers do get a mortgage, interest rates are affordable. So, as we approach what is a pivotal juncture for the industry – with the scheme due to come to an end in 2021 – clarity is urgently needed over what will come next.

“The scheme has already helped over 150,000 households into home ownership – and with the government setting itself targets to build a million new homes by 2020, it seems counter-intuitive to close the door on what has been a successful vehicle for helping to purchase those new homes.

“The housing crisis continues to be a political hot potato. As shown by IMLA’s own research, the Help to buy scheme made up 27% of all new housing completions between April 2013 and March 2017, so its role in helping people get onto the ladder cannot be underestimated.

“The government has emphasised its commitment to mend the ‘broken housing market’, to speed up the planning process and to improve the whole buying and selling experience for consumers. But it will take time to put these proposals in place, and longer before their effects are felt. Help to buy’s impact has been fairly immediate – and it’s unclear why it should not continue.

“More than a third of all new build properties are currently dependent on Help to buy, so the potential effect of any withdrawal would be significant, not just to developers and lenders, but also to consumers who may, in turn, see house prices increase. It’s clear that Help to buy has helped a number of people on higher incomes, and that this has had an inflationary impact on house prices in some areas. The government might want to address that in some way by potentially capping the programme or by better targeting those who are in more need of assistance. But to do nothing won’t help the market.

“IMLA, along with many industry stakeholders, would welcome an announcement – or at least a firm indication – that some form of government support will continue post-2021. We would welcome discussions with government as to what that continuation might look like: some adjustments might be appropriate given the experience to date – but the impact which the scheme has had on new home ownership is surely too significant for it simply to be abandoned at this stage.”

Kate Davies, The Intermediary Mortgage Lenders Association

“We would suggest that the Help to buy scheme is working as it was originally designed to back in the early years after the 2008 financial crash. There were three broad objectives at its launch; improving access to low deposit mortgages for creditworthy households, increasing the supply of new housing and making a significant contribution to the general economy. It has done exactly that, as evidenced by MHCLG official net housing supply figures which show that in the year before launch of the England scheme 2012/13, there were 118,540 new build completions. However, in the last year of annual figures 2016/17, there were 183,570, which is a 55% increase over the year to March 2013. As a consequence, over 169,000 new homeowners have benefitted from the low deposit equity loan scheme since its launch in April 2013.

“As has been reported in the last few days, almost since the scheme started there has been about a fifth of all borrowers using it who were existing homeowners, and this has given them an opportunity to move up the housing ladder, so creating a chance for a first-time buyer to purchase a second-hand property. In essence it has got England moving again.

“We are aware the government is looking at the England and London Help to buy schemes with a view to extended them past their current expiration date, and obviously one would suppose that housebuilders are keen to know what will happen after its current closing date of March 2021, so they can effectively plan their build programmes. For housebuilders this is effectively only two years away, as new sales will need to be underway in September 2020 to meet the scheme’s completion deadline the following March, therefore in terms of planning the labour and materials required to deliver the much-needed additional housing which is required, realistically the sector needs a commitment from the government sooner rather than later.

“It’s realistic to suppose that the housing industry would like to see an extension of the scheme to maintain confidence and momentum, though if granted some of the loan criteria may be revised to better target first time buyers. If this is the case, then the industry is likely to require time to develop alternative financial solutions which will continue to boost housing supply and also create an affordable environment for first-time buyers to take that first step on the housing ladder.”

James Chidgey, Mortgage Advice Bureau

“The Help to buy scheme has been a great initiative designed to help people to get on the property ladder and support the housing market. We would like to see the government announce an extension of the initiative beyond its 2021 deadline, to give everyone certainty as soon as possible. We understand the need to slowly wean the market off Help to buy over time, but we’re not ready for significant amendments now.

Whilst there are calls to prioritise first time buyers to allay any fears that the current scheme is being misused by wealthy borrowers, we need to ensure that movers are not put off taking their next steps, leading to a further drop in transaction numbers.”

Jeremy Duncombe, Accord Mortgages

“The help to buy option has really made a difference to some people being able to own a home when it would have been otherwise unaffordable. We are supportive of the scheme and of any adjustments that might be required to ensure that the right people can continue to access it.

We recognise, however, that there is a real requirement for focus on how the remortgage element of Help to buy works so that consumers and brokers alike clearly understand the options available.”

Steve Carruthers, Newcastle Intermediaries

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