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Help to Buy: equity loan completions hit new record in June

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  • 31/07/2014
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Help to Buy: equity loan completions hit new record in June
Help to Buy: equity loan completions soared 19% in one month to 4,357, the highest number yet.

First-time buyers continued to drive the Help to Buy: equity loan scheme, completing on 85% of the 27,167 transactions since the scheme launched 15 months ago.

The average buyer price in June was £207,967 with more completions in Wiltshire, Leeds and Central Bedfordshire than anywhere else in the country.

Stewart Baseley, executive chairman of the Home Builders Federation said: “Help to Buy is allowing people across the county to buy new build homes and if people can buy, builders can build.

“The industry has recruited thousands of people in recent months and is working with its supply chain to ensure the capacity is there to sustain increases – all of which is giving the country a huge economic boost.”

He added planning changes must be made to meet need in the long-term.

At launch, the equity loan scheme aimed to offer £9.7bn of additional investment to help people into home ownership. The scheme aims to help a further 167,000 home buyers, as well as offer a further boost to the UK’s construction sector.

The equity loan is available at up to 20% of the value of a new-build home worth up to £600,000 for all buyers with a 5% deposit.

This month the DCLG offers access to a localised map illustrating uptake for the equity loan scheme this month.

The figures for New Buy, the government’s first new-build support scheme launched in 2012 show 5,328 New Buy completions to June, which is offered by just six lenders.

NewBuy is available in England on all the properties offered by home builders participating in the scheme up to a sale price of £500,000. The Scottish equivalent of NewBuy is Mi New Home.

Mortgage Advice Bureau released figures today suggesting homebuyers are increasingly pushing for the 95% maximum on Help to Buy 2, the mortgage guarantee part of the scheme.

Affordability is becoming an increasing problem as the average loan to value (LTV) of MAB applicants rose from 92.5% in April to 94.4% in June.

Help to Buy applicants offered £2,911 less deposit at £8,527 in June against £11,438 in April.

David Brown, commercial director of LSL Property Services, said: “The Bank of Mum and Dad is still a very important helping hand onto the housing ladder for first time buyers. It will remain important if interest rates begin to rise and repayments get more expensive.”

He continued: “The new loan-to-income caps could have a stifling effect on the first-time buyer market. They have understandably been designed to prevent too much ‘risky’ lending to borrowers with smaller deposits, but they need careful interpretation to ensure they do not cut good buyers – with realistic and very affordable borrowing expectations – out of the market.”

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