The combined impact of both the Help to Buy equity loan and mortgage guarantee schemes does not appear to be creating an amplifying effect on the more active parts of the UK housing market, according to CML analysis of new government data.
New government figures show that, to date, only 4% of all mortgages for house purchase have involved either of the Help to Buy products (mortgage guarantee or equity loan) over the period April 2013 to March 2014.
The overall average property value for first-time buyers over this period was £188,600 – very similar to the overall Help to Buy property value of £190,200.
However, the impact of Help to Buy varies considerably on a regional basis. For example, the active London market accounted for 13% of all loans for house purchase between April 2013 and March 2014. However, London accounted for only 6% of all Help to Buy (equity loan and mortgage guarantee) transactions.
By value, 45% of properties bought involving a Help to Buy mortgage guarantee were for properties costing up to £125,000. Only 7% of Help to Buy transactions were for properties costing over £250,000.
CML director general Paul Smee said: “Broadly, we should be reassured by the latest data on Help to Buy. The policy appears to be reaching the geographical parts of the market where recovery has been weakest, while accounting for only a small proportion of business in those areas where the market is more active. On the basis of these figures, the scheme appears to be successfully reaching its target group of creditworthy borrowers who would otherwise be unable to buy until they had accumulated a more significant deposit. Lenders are always mindful of what their customers can afford.
“Throughout the UK, the proportion of business accounted for by Help to Buy has to date been modest overall. Any worry that the scheme risks stoking a housing boom fortunately does not seem to be playing out in practice so far.”