Whether you agree with the scheme or not, it can't be denied that Help to Buy has reinvigorated the mortgage market. Research from Moneyfacts has revealed just how much of an impact it's had, with there now being 242% more mortgages available to those with a 5% deposit than there was at the scheme's launch.
However, what might be surprising is that the majority of these mortgages aren't from Help to Buy participants. In fact, only 50 of the 147 mortgages currently available in the 95% loan-to-value (LTV) sector are offered by lenders taking part in the Help to Buy mortgage guarantee (H2B) scheme, meaning there are far more deals available to first-time buyers from providers who aren't participating than from those who are.
Overall, just 13 lenders offer 95% LTV mortgages that come with the Government guarantee, compared to 28 that are operating independently. So, while this means that H2B has clearly been the catalyst for an increased level of activity in the sector - at the scheme's launch in October there were just 43 products available in the 95% LTV market - it isn't the driving force behind the increase.
Sylvia Waycot, editor of Moneyfacts.co.uk, comments:
"The first-time buyer market is being sustained independently by lenders, mainly building societies outside of the Government scheme. Non-participating lenders are now offering around three of every four of the 95% LTV products available. The first-time buyer market has reopened for business [but] surprisingly, H2B participants are yet to show any appetite to take the market by storm."
Despite the scheme having fulfilled its intended purpose – of ensuring more buyers with a small deposit can get their foot on the ladder – it isn't without its critics. Some would argue that it's helped overheat the market and increase house prices to unsustainable levels, however looking closer at the figures means there shouldn't be too much cause for concern.
Official figures show that there were over 147,800 mortgage approvals made to first-time buyers between October 2013 and March 2014, of which just 7,313 were a part of the Government scheme. And, with property transactions having fallen over the past few months – May's total of 99,320 is 3.5% lower than April – it would seem that new affordability checks have started to take some of the heat out of the market.
Therefore, any additional constraints could well be unwarranted. Given that sales within the scheme have so far only accounted for 4.94% of the market, "calls for the curbing of H2B to aid any reduction in a housing bubble are unlikely to have any real effect," said Ms Waycot, and it's arguably even more unnecessary with the majority of 95% LTV mortgages coming from lenders outside the scheme.
Besides, having greater access to affordable mortgages can only be a good thing for a large proportion of first-time buyers, many of whom might be able to comfortably afford the repayments without necessarily being able to amass a significant deposit. And, with so much more choice available to those seeking a mortgage with a deposit of just 5%, it's a great time to get on board and compare the options – whether your lender is part of the Help to Buy scheme or not.
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For more information on Help to Buy check out our guides to Mortgage Guarantee and Equity Loans
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