Mortgages  

‘Long-term approach to mortgages essential’

The vice-president of commercial at insurance firm Genworth Europe, said that, following the government’s report on the Help to Buy scheme, the policy needed to do more.

He said: “Demand can be managed prudently by lenders and private insurers operating under the new mortgage rules, which ensure a tight grip on affordability. Having addressed concerns over the scheme stoking a bubble, the Treasury must set out a viable exit strategy that does not put first-time buyers back to square one.”

In its 12-page report, the government showed that the Help to Buy scheme has helped 80 per cent of first-time buyers in its first six months. It also claimed the scheme is not responsible for stoking the housing boom.

Article continues after advert

It said only 4 per cent of all mortgages for house purchases between April 2013 and March 2014 involved either of the Help to Buy products (mortgage guarantee or equity loan).

London accounted for 13 per cent of all loans for house-buying but only 6 per cent of Help to Buy transactions.

Paul Smee, the director general of the Council of Mortgage Lenders, said: “Throughout the UK, the proportion of business accounted for by Help to Buy has to date been modest overall. Any worry that the scheme risks stoking a housing boom fortunately does not seem to be playing out in practice so far.

“The policy appears to be reaching the parts of the market where recovery has been weakest, while accounting for only a small proportion of business in those areas where the market is more active.”

Adviser view

Kevin Hever, director of Wolverhampton-based Cornerstone Financial, said: “More houses need to be built, regardless of Help to Buy. However, it was right that the government provided the scheme and continues to do so: it has helped first-time buyers with smaller deposits get onto the property ladder. Otherwise, there would have been no housebuilding during the downturn.”