Help to Buy boosts first-time buyers but lenders warn of 2016 fallout
More than 80,000 people have used the government's Help to Buy scheme to by a home since it was launched almost two years ago, with lenders warning letting the scheme's end as planned next year will be a "big gamble".
Fresh government data showed 80% of completions under Help To Buy were taken up by first-time buyers.
This was one of the reasons behind a sharp increase in the ability of first-time buyers to access the market without family help for their deposit, according to the Council for Mortgage Lenders (CML).
The government's Help to Buy data showed that 94% of completions took place outside of London and, as results statements from housebuilding companies have suggested, over half of Help to Buy completions were for new-build homes.
However, while the scheme, which offers banks and building societies a state guarantee on mortgages of up to 95% loan to value, will still be applicable to new-build houses until 2020, it will be closed to existing houses from 2016.
The Intermediary Mortgage Lenders Association (IMLA) cautioned that 65% of its members believed that competition would decline unless a permanent indemnity scheme was brought in to replace Help to Buy.
Peter Williams, executive director of IMLA, said: “The help-to-buy mortgage guarantee has breathed new life into the market and opened the door to more prospective homeowners without sacrificing standards when it comes to affordability checks.
“It is encouraging to see more lenders offering 95% LTV products outside of the scheme – but it would be a big gamble to rely on this continuing without the boost that the government has brought to the first-time buyer market.”
Updated figures from the CML showed strong growth in the total number of first-time buyers last year, with more than 300,000 people buying their first home – the highest total since 2007.
Another significant factor in the increasing number of first-time buyers able to enter the market without help is the improvement in the availability of loans at higher loan-to-value (LTV) ratios.