Far too much focus has been placed on the potential negatives of Help to Buy (particularly the mortgage guarantee element) over the past few months with the ultimate result being that the aims of the entire scheme have been somewhat forgotten.
There has been an assumption made by many commentators, economists, former Chancellors, MPs – you name it – that Help to Buy has been fuelling rapid house price increases particularly in London.
However, the recent statistics issued by HM Treasury in relation to Help to Buy show this is not the case. Anyone who continues to think that Help to Buy is responsible for 20% increases in house prices in the Greater London area will probably need to book themselves into a reputable clinic.
The fact is that Help to Buy appears to be helping those it was designed to help – predominantly first-time buyers who could only save smaller amounts for a deposit and, without the availability of 90/95% mortgages, would have next to no chance of buying a property.
It is also not been ‘abused’ in areas in and around the capital and given average loan sizes are well below average prices it could hardly be said to be the gas that is inflating the London-centric bubble.
Perhaps now we can move away from this flimsy argument and allow the scheme to be used effectively but perhaps also focus on what should be put in place post-HTB2 because as we are often prone to state, this is a short-term solution to a long-term problem.
Affordability measures are more stringent plus rates have also increased which makes it more expensive; add in the stress-testing that lenders now have to conduct regarding future rate increases and you could understand why first-timers might soon be pining for the heady days of the start of the year.
Simon Crone is president of commercial mortgage insurance, Europe at Genworth