Withdrawal of the Help to Buy scheme should benefit the housing market

Thu 06 Oct 2016

The Government’s withdrawal of its Help to Buy Mortgage Guarantee Scheme is a positive step according to Jeremy Miller.

He feels there may be a short lull in market activity immediately after the withdrawal, but that is likely to be temporary. More importantly, Jeremy believes it has brought confidence back to the market.

The scheme was introduced in 2013 to increase the availability of high loan to value mortgages. Since then 86,000 households have benefitted - with an average property price of £157,000 compared to the national average price of £216,000. Other parts of Help to Buy – including the equity loan scheme, which is available on new builds only, and the ISA bank account – will continue to operate beyond 2016.

Jeremy said: “First time buyers don’t want to hear this but, looking at the big picture, I believe ending the scheme is the right thing to do - although it has been extremely successful whilst it has lasted.

“As hoped, the Help to Buy Mortgage Guarantee has buoyed up the market but, if it continued, would risk ‘overheating’ the market.  That could lead to another boom and bust cycle, something we all want to avoid.

“I feel first time buyers do need help but it might be better to do it in other ways. What everyone is striving for is a stable market because that builds confidence and at the moment that seems to be what we have.”

Ben Leach, Mortgage Business Finance Consultant at Vision IFP, agrees that the scheme has worked but has now run its course.

He said: “It was introduced because lenders were not lending up to 95% of property value. Because the scheme has increased market confidence it has encouraged several lenders to reintroduced the 95% mortgage and we anticipate the rest will follow suit. In essence the scheme has achieved what it set out to do.”