MortgagesSep 2 2014

‘Help to Buy’-backed home buys surge in spring

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The government more than doubled the total number of home purchases backed by its Help To Buy mortgage guarantee scheme during the spring housebuilding season, data released on Tuesday showed.

Whitehall backed more than 11,000 house purchases through the programme in the three months to the end of June, up from the 7,321 supported in the scheme’s first six months of operation, according to figures from the Treasury.

Nearly 19,000 home purchases have now been supported since the guarantees were launched last October - 2 per cent of all residential transactions across the UK during the period, reports the FT’s Kate Allen.

The purchases take the total value of mortgage lending supported to £2.7bn, through £388m-worth of guarantees.

Nearly half of all home purchases were worth under £125,000 and buyers have been particularly concentrated in Scotland, Wales, the north west and east of England. Four in five purchasers were first time buyers.

Some politicians and economists have voiced concerns that the guarantees are creating a false floor in house prices in local housing markets where prices were previously falling. Since the scheme launched prices in Scotland, Wales and northern England have all begun to grow more strongly.

Take-up in the regions with the most expensive homes - London and the south east - has by contrast been muted. The guarantee is only available for homes worth under £600,000; 57 buyers have so far used the scheme to purchase homes worth above £500,000.

Two-thirds of buyers had a household income of under £50,000, with 650 households using the guarantees with an income of under £20,000. 833 households had an income of over £100,000.