Decline in Help To Buy applications evident

by | Thursday 17th Feb 2022 | Mortgage News

Since 2013 the government in conjunction with house builders has offered the Help To Buy scheme which was developed with the intention of helping struggling prospective home buyers to fund the purchase of a new build property. Initially the scheme was set to run until 2020 but was slightly restructured and extended until 2023. The scheme was an instant hit and people flocked in their thousands to make the most of a really incredible helping hand.

Over the last almost 10 years the Help To Buy scheme has been used to purchase over 328,506 properties. In total, the value of the Help To Buy equity loans has reached over £20 billion, with the value of the properties sold under the scheme going past the £90 billion mark. But, as the scheme get nearer to its end, it seems that people are leaning away from the previously popular scheme in favour of other purchasing avenues. Recently release government figures showed that a total of 7,270 properties were bought using this equity loan scheme between the 1st of July and the 30th of September last year. This figure was 39% lower than the same period in 2019, and 33% lower than the previous quarter.

What are the markets saying?

Emma Simon, Writing for Mortgage Strategy comments on this downward trend saying: “During this three-month period, homebuyers also benefited from the stamp duty holiday, although this tax give-away was gradually phased out in the three months to the end of September. The current HTB scheme was relaunched in April 2021, with eligibility restricted to first time buyers and new regional price caps, which has also restricted access to this scheme. Government figure reviewing property sales using different iterations of this HTB scheme show that the number of completions dropped significantly when the initial restrictions were imposed due to the Covid-19 pandemic, with completions in May 2020 down by 66% when compared to May 2019. The introduction of the new scheme in Q2 2021 led to a reduction in completions compared to Q1 2021 in all regions of England except London.”

What do the mortgage advisors say?

Louis Mason, Content Manager for Oportfolio Mortgages says: “I think this decrease in applications was expected. It certainly was expected by mortgage advisors. Perhaps it’s the builders slowly leading people away from the scheme as they build fewer Help To Buy properties or perhaps its just that people are looking at alternative methods of purchasing as they know that help to buy won’t be around in the near future. Schemes such as shared ownership or the 95% deposit unlock scheme are going to start dominating the new build market and in some places such as London, they already have! It’s time that we start to put Help To Buy behind us and look to the future.”

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