Mortgage industry reacts to help to buy rumours

Mortgage industry reacts to help to buy rumours 1024 576 NGI Residential Mortgages

Following the recent reported speculation over the future of the Help to buy schemeMortgage Strategy sought the views of some key voices in the industry on if they believe that HTB has been a success, and what its future may look like.

“Clarity is required on how Help to buy is going to look beyond 2021 and with the autumn budget looming that would seem a logical opportunity for the government to announce its intentions.

“While the basic principles remain sound and provide opportunities for brokers and participating lenders to attract new business, Help to buy may well need some refining so that support is being directed to where it is needed the most.

“Confirmation of any changes or extensions to the scheme would be welcomed as quickly as possible. Housebuilders have to know so their own development plans are aligned, but potential borrowers also need to have an understanding as well. It will be beneficial for them to know exactly what additional support is going to be available in the future to allow them to plan accordingly.”

“There is still considerable appetite for Help to buy among first-time buyers. Their greatest barrier to getting on the housing ladder is getting a deposit and that’s what this government programme has effectively enabled first-time buyers to do. Importantly, once first-time buyers do get a mortgage, interest rates are affordable. So, as we approach what is a pivotal juncture for the industry – with the scheme due to come to an end in 2021 – clarity is urgently needed over what will come next.

“The scheme has already helped over 150,000 households into home ownership – and with the government setting itself targets to build a million new homes by 2020, it seems counter-intuitive to close the door on what has been a successful vehicle for helping to purchase those new homes.

“The housing crisis continues to be a political hot potato. As shown by IMLA’s own research, the Help to buy scheme made up 27% of all new housing completions between April 2013 and March 2017, so its role in helping people get onto the ladder cannot be underestimated.

“The government has emphasised its commitment to mend the ‘broken housing market’, to speed up the planning process and to improve the whole buying and selling experience for consumers. But it will take time to put these proposals in place, and longer before their effects are felt. Help to buy’s impact has been fairly immediate – and it’s unclear why it should not continue.

“More than a third of all new build properties are currently dependent on Help to buy, so the potential effect of any withdrawal would be significant, not just to developers and lenders, but also to consumers who may, in turn, see house prices increase. It’s clear that Help to buy has helped a number of people on higher incomes, and that this has had an inflationary impact on house prices in some areas. The government might want to address that in some way by potentially capping the programme or by better targeting those who are in more need of assistance. But to do nothing won’t help the market.

“IMLA, along with many industry stakeholders, would welcome an announcement – or at least a firm indication – that some form of government support will continue post-2021. We would welcome discussions with government as to what that continuation might look like: some adjustments might be appropriate given the experience to date – but the impact which the scheme has had on new home ownership is surely too significant for it simply to be abandoned at this stage.”

“The Help to buy scheme has been a great initiative designed to help people to get on the property ladder and support the housing market. We would like to see the government announce an extension of the initiative beyond its 2021 deadline, to give everyone certainty as soon as possible. We understand the need to slowly wean the market off Help to buy over time, but we’re not ready for significant amendments now.

Whilst there are calls to prioritise first time buyers to allay any fears that the current scheme is being misused by wealthy borrowers, we need to ensure that movers are not put off taking their next steps, leading to a further drop in transaction numbers.”

* Content Source – Mortgage Strategy