Designed to stimulate the mortgage market by helping first-time buyers onto the housing ladder and to enable homeowners to move more easily, Help to Buy has been met with mixed reactions from experts.
In Money Management’s May mortgage spotlight, Laverne Hadaway says while on the one hand it is seen as a step in the right direction, for others, it is a “cynical ploy” to generate the feel-good factor to win votes in the next election.
The Help to Buy scheme is similar to the FirstBuy scheme, launched in the 2011 Budget, but offers a loan of up to 20 per cent of the value of a new-build property, repaid only when it is sold.
Of course there are stipulations. For example, borrowers must provide a minimum of a 5 per cent deposit to qualify for the scheme – which is interest free for the first five years. Not just designed for first-time buyers, the scheme is open to all provided they are sufficiently credit-worthy and can be used to purchase property up to the value of £600,000.
“As with all such initiatives, it is too early to speculate about how effective they might be. Most likely it will have some beneficial effect, although it may not be as stimulating to the housing and mortgage markets as the chancellor had hoped,” Ms Hadaway adds.
While the mortgage market has been dull in recent years, this may be the sign that it is starting to build up again.