As previously advertised, the Government has confirmed that the Help to Buy mortgage guarantee scheme will close to new loans on December 31, 2016.
The programme was introduced three years ago to raise the availability of high loan to value mortgages. According to the Government, confidence has now come back to the market with a rising number of lenders offering 90-95% loans away from the scheme. The government will continue to offer the very popular Help to Buy equity loan and ISA schemes.
In a letter to the Bank of England on September 29, the Chancellor Philip Hammond confirmed that the scheme would not be extended.
Paul Smee, Council of Mortgage Lenders Director General, commented: “Help to Buy continues to give a welcome leg-up to many creditworthy buyers who may not otherwise have been able to get a foothold on the property ladder. The scheme has helped buyers right across the country, including a high proportion of younger borrowers and first-time buyers.
Stewart Baseley, executive chairman of the Home Builders Federation, added: “Help to Buy continues to drive demand for new build homes by making home ownership more affordable and realistic. Its success is directly leading to more homes being built as it provides the confidence developers need to invest in the land and people required to increase their output.”
Meanwhile, Richard Sexton, Director at e.surv, said that to date, the government has shown enthusiasm supporting the housing market, however this U-turn by the Chancellor begs the question of whether a change of emphasis is in the offing.
The schemeâs early success resulted in a number of high street lenders including higher LTV products in their offerings. With this in mind, the withdrawal of Help to Buy may not have a dramatic an impact on the market. However, lenders who made plans to include the scheme as part of their product range may now have to revise their strategies.