H2B II bubble concerns kept at bay: Genworth

The vice-president of commercial at Genworth said while HTB2 did encourage first-timers back to the market, it also helped to protect high loan-to-value loans.

He said: “These figures refute the notion that Help to Buy has flooded the market and show it delivering what it set out to achieve.

“What the scheme is doing, as a fraction of total first-time buyer activity, is offering hope to those who struggle to raise the average deposit, but can still afford repayments and pass affordability checks.”

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According to data from Genworth, the scheme provided just 3.9 per cent of the total HTB2 loans to FTBs between October 2013 and March 2014, equating to 148,200 loans out of 5,843.

In London, only 1.4 per cent took out HTB2 loans, representing only 342 out of 25,300 during the period.

The Genworth Moneyfacts Mortgage LTV Tracker revealed that the scheme helped one in six of the extra 35,700 FTBs, compared to the same period the previous year, who put down a 5 to 15 per cent deposit.

It also said that the introduction of the mortgage market review had no impact on the availability of mortgage products at 90 and 95 per cent LTV, with the product range at higher level growing the most year-on-year.

Mr Crone said: “Responsible lending at higher LTVs has a vital role to play, especially when it is getting tougher for people on good wages to save a deposit as prices rise. Builders will only build if people can buy, which is why prudent high LTV lending is an essential part of the picture.”

Data from Nationwide also revealed that UK house prices increased by 11.1 per cent, significantly higher than May last year, when they stood at 1.1 per cent.

The average cost of a home has grown almost £20,000 over the past year, rising to £186,512 from £167,912 in May 2013.

Jeremy Duncombe, director of Legal & General Mortgage Club, said: “While continued house price rises are a sign that confidence has returned to the market, these sharp increases, particularly in London and the South East, are detrimental to the overall recovery.”

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Blair Cann, senior partner at Hertfordshire-based M Thurlow, said: “FTBs have to be earning £50,000 plus to get a mortgage – that’s if they have enough to put down. HTB is vital to give the young the ability to get on the property ladder. It has certainly helped first time buyers. Higher LTV products are valuable, but if anything happens to market, and house prices fall, then you will have a lot of people with negative equity.”