2nd September 2014
More than 48,000 people have bought homes through the Government’s Help to Buy scheme since it launched last year.
Official figures reveal that 82 per cent of those who have so far completed on homes through the scheme were first-time buyers and the average sum paid was £187,800, which is below the national average of £265,000.
The data also shows that 94 per cent of purchases were outside London.
Help to Buy has two parts: the equity loan scheme, launched in April 2013, and the mortgage guarantee scheme, launched last October.
The equity loan scheme is only available on new-build properties and enables buyers to purchase a home with a loan of up to 20 per cent from the Government, which is interest-free for the first five years.
The mortgage guarantee scheme sees the Government protect participating lenders against some of their potential losses, enabling them to offer home loans of up to 95 per cent loan-to-value
Both parts of the scheme enable borrowers to purchase a home with a deposit of just 5 per cent.
However, there are signs that the popularity of the schemes may be starting to wane as the number of people using the mortgage guarantee element of Help to Buy fell in June, compared with May.
In order to address fears that the Help to Buy scheme could result in borrowers over-stretching themselves the Chancellor announced in June that the loans would be subject to a cap of 4.5 times income.
George Osborne, the Chancellor, says the scheme is working exactly as it was intended.
He says: “It’s a key part of our long term economic plan, which is supporting hard working people to secure a better future for their families.
“Importantly, Help to Buy is also driving a big increase in house building in Britain, boosting the construction industry and increasing housing supply.”