The government announced a £280m extension of shared equity scheme FirstBuy earlier today, one of a number of new housing initiatives launched in recent months.
Mas, president of mortgage insurance at Genworth, told Mortgage Solutions that the government needed to make sure its funding actually made it to first timers.
“First-time buyers are critical in driving property transactions leading to the activity in the rest of the housing market. This in turn is an important catalyst in stimulating wider economic recovery.
“Since 2008, the UK government has pumped more than a trillion into the economy – over £600bn has been through banks alone. Yet the result is that four years on, FTBs and those seeking high loan to value mortgages are still left with restricted access.
“The numbers speak for themselves, a £23.6bn reduction in FTB volume since 2007 and a 43% drop in 95% LTVs.”
“It’s highly ironic that FTBs struggle to access the property market at a time when policymakers chase a range of options that include Funding for Lending and NewBuy schemes.
Today’s announcement follows the launch of the Funding for Lending scheme (FLS) last month, but Mas warned that the FLS money could be disproportionately used on parts of the market which are already growing.
“The Funding for Lending scheme grants banks access to cheap funding using public funds in order to revive credit flow to the real economy.
“This is extremely welcome, however, there’s a risk of this scheme failing to meet the needs of FTBs and may indirectly serve as a boost to the buy-to-let market and low loan to value remortgage customers and even the second mortgage industry. This would defeat the purpose of the FLS as an economic ‘growth driver’.”