First time buyers are rushing to take advantage of the government’s Help to Buy scheme, 82% of completed purchases were made by first-time buyers. This could be due to the fact that the average cost for purchasing a house on the scheme is around £187,800 which is significantly below the national average. Information recently by the government claims that already 48,000 people have taken advantage of Help to Buy and 94% of this purchased houses outside of London.
Help to Buy official statistics show that the government’s scheme has helped almost 40,000 first-time buyers onto the housing ladder since its launch last year. However, Help to Buy only accounts for a small percentage of overall mortgage transactions, currently 2.5% of mortgage guaranteed purchases.
This may due to the fact that stringent ‘responsible lending’ checks are a core aspect of Help to Buy. On 26 June the Chancellor of the Exchequer announced that new mortgage guarantee loans would be restricted to 4.5 per cent of a borrower’s income. This means the Help to Buy scheme is off limits for many who do not have a large income, but have saved for a deposit on a house.
And yet continuing trends in official statistics show that the scheme is popular throughout every region of the country. NatWest and RBS have released a statement highlighting the demand. Lloyd Cochrane, Head of Mortgages at NatWest and RBS, said: ‘At RBS and NatWest, we are committed to helping our customers achieve their goals and get on with their lives. Buying a home is one of the biggest decisions we make in our lives and younger people often, whilst they can afford monthly mortgage repayments, need help to make that first step as they struggle to save for a large deposit. The Help to Buy: mortgage guarantee scheme means that they can get there earlier.’
While Help to Buy completions have been least concentrated in areas where house price growth has been highest, the highest number of mortgage guarantee scheme completions has been in the North West, and the highest number of equity loan scheme sales has been in the South East.
Overall, 94% of the total 48,393 completions under the scheme have been made by households outside of London, in part due to the desperate lack of affordable housing in the capital.