There were 5,096 completions in first quarter of 2016 compared to 8,182 in the last three months of 2015. This figure is also a notable 25% from a year earlier in Q1 of 2016 when there were 6,829 completions.
When the Help to Buy Mortgage Guarantee scheme launched it prompted a resurgence in high loan-to-value lending to borrowers without a large deposit. This fall in completion numbers, combined with Brexit uncertainty and the fact that the scheme is due to end later this year could leave a low deposit lending gap.
Patrick Bamford, business development director for AmTrust International, Mortgage and Special Risks, said: “It is concerning to see the number of Help to Buy Mortgage Guarantee completions fall so drastically. The government scheme has proved instrumental in aiding first-time buyers fulfil their dreams of home ownership.
“However, the scheme is due to end this year and there are very real concerns that this will cause a sharp decline in high LTV lending. We have already seen worrying signs that the growth in lending to those with smaller deposits triggered by the scheme is already on the wane.
“The uncertainty caused by the Brexit referendum result means banks will be reviewing their mortgage risk appetite. This, combined with the end of the Help to Buy scheme, risks creating a perfect storm for lending to first time buyers with small deposits, which could have a significant impact on the broader property market.”
The Treasury’s statistics show that 79% of Help to Buy Mortgage Guarantee homeloans were borrowed by first-time buyers. Regional analysis revealed that the scheme is supporting a higher proportion of mortgages in the north west of England, and in Scotland, and a lower proportion in London.
The mean value of a property bought or remortgaged through the scheme was £156,301, compared to a national average house price of £292,000.
