38% of consumers seeking a mortgage this year know nothing about the government’s Help to Buy 95% mortgage scheme, according to new research from Mortgage Advice Bureau (MAB).
Meanwhile, 42% have no knowledge of Help to Buy equity loans despite the fact they were first introduced in April 2013: six months before the 95% mortgage guarantee launched.
MAB said that with first time buyers making up 50% of mortgage seekers while 35% look to move house, this lack of knowledge may lead many potential buyers to miss out on the best deal to suit their needs.
22% of mortgage seekers have not enquired about Help to Buy because they don’t know what it is, while 17% have not done so because they believe they won’t be eligible.
17% wrongly believe that Help to Buy is only for first-time buyers, while an additional 17% believe this may be the case.
However, 10% have already inquired about Help to Buy and an additional 35% intend to do so – demonstrating the scheme’s appeal and an appetite for more information about the available products.
Demand among mortgage seekers for financial assistance is high: 28% cannot afford to buy without assistance from the government while 26% will be turning to help from friends and family.
As a result, 38% are less likely to consider a lender’s products if they do not offer Help to Buy mortgages.
However, 55% are unswayed by lenders’ involvement in Help to Buy, suggesting a willingness to compare products and rates from across the market.
MAD said that as one of the first lenders to support Help to Buy, Halifax has stolen a march in terms of awareness and is the brand that mortgage seekers most commonly associate with the scheme (18%). NatWest (16%) enjoys the next best consumer profile followed by Barclays, HSBC, Lloyds, Santander and Nationwide. Both Virgin Money and Aldermore were less associated with the scheme than the Cooperative Bank – despite no Help to Buy commitment or product from this lender.
Brian Murphy, head of lending at Mortgage Advice Bureau, said: “Lenders are steadily warming to the Help to Buy mortgage guarantee scheme, with both high street brands and ‘challenger’ banks announcing their participation over the past few months. More choice is undoubtedly a positive for anyone looking to buy property. But while consumer demand for mortgages is high and plenty are keen for financial assistance, many are in danger of missing out and are being let down by a lack of knowledge of the available options.
“Common misconceptions such as the belief that Help to Buy is only for first-time buyers could hold others back from securing a mortgage to move house and potentially free up more properties for those looking to join the ladder. Qualified advice can ensure you don’t get lost in the detail or miss out on the chance to take full advantage of the scheme, especially as the product range increases throughout 2014.”
