08 February 2023
If you are covering the Help to Buy Equity Loan or 95% mortgage guarantee scheme statistics today, please see the following comment from Karen Noye, mortgage expert at Quilter:
Help to buy completions down 11%
"New Help to Buy data out this morning show that the various regional price caps put on the new Help to Buy equity scheme have had a significant impact on completions causing them to drop 11% compared to the same quarter of the previous year.
"The introduction of the current Help to Buy scheme in 2021 Q2 led to a reduction in completions compared to 2021 Q1 in all regions of England except London, where completions increased by 3% but also where the £600,000 price cap from the previous scheme was maintained.
"Areas suffering the worst impact of the price cap include the Northeast where completions were down 45% in 2022 Q3 when compared to 2021 Q3. Considering the huge increase in house prices over the last few years this is not surprising. While the cost-of-living crisis is starting to exert downward pressure on prices they still remain very high and this will naturally impact the completion rate of the scheme.
95% mortgage guarantee scheme fails to build momentum
"First-time buyers are continuing to face a whole host of issues, from ever-increasing house prices, inflation rapidly eating away at their deposits, and the rising cost of living disrupting their ability to save, all in conjunction with successive interest rate hikes.
"However, the 95% mortgage guarantee scheme still remains a relatively unpopular scheme given this economic backdrop. Since the schemes launch to September 2022 only just over 30,000 mortgage have completed using the scheme.
"Some of the reasons for this include that some lenders have been reluctant to participate in the scheme, leading to limited options for potential borrowers. As such borrowers have opted for 95% deals outside of the scheme that might offer more competitive prices. 95% mortgages are also very expensive so many people may try and hold out until they can afford a slightly larger deposit.
"However, with inflation causing significant strain on finances for those desperate to get on the housing ladder these types of scheme may end up gaining momentum in the next year. This may be why the scheme has been extended and is now set to finish at the end of this year."
