Mortgages  

Chancellor fails to reveal all Help to Buy details

The chancellor is still leaving the industry in the dark about how borrowers - and therefore lenders - will exit the scheme, according to the Council of Mortgage Lenders.

At a meeting with representatives of lenders and housebuilders on the government’s new Help to Buy mortgage guarantee scheme, due to launch in January, the CML said some details were revealed about how the new deal would work.

However the CML admitted information about the commercial fee for participation and how capital relief will work was not revealed leaving lenders unable to make an informed choice about their participation.

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The CML has consistently emphasised that, to be successful, the Help to Buy mortgage guarantee scheme needs to:

• be straightforward for lenders to implement and administer (particularly given the short timescale available within which systems changes need to be made);

• have clear success criteria, and a clear exit strategy - the three-year nature of the scheme is subject to review by the Financial Policy Committee; lenders do not expect to see the scheme become permanent or semi-permanent by default; and,

• be accompanied by an equivalent government focus on the supply of new housing (not just the supply of credit), to avoid the unwelcome effects that stimulating demand without also increasing supply would create.

Paul Smee, director general of the CML, said: “The mortgage market is open for business, and it is clear that government support has helped to create more favourable market conditions for home-buyers.

“Lenders, whether they choose to participate in the guarantee scheme or stay outside, will continue to do their utmost to meet households’ needs for mortgages, but always in a way that is responsible.”

To learn more about Help to Buy - and earn CPD - read FTAdviser’s Guide to Help to Buy.