Mortgages  

Help to Buy loans pass £20bn after record year

Help to Buy loans pass £20bn after record year
 

The government’s Help to Buy scheme lent more than £20bn since it began back in April 2013.

In the year to March 31, 2021, 55,649 households bought their home with the support of a Help to Buy equity loan - setting a new record.

Compared to the first quarter of 2020, completions under the scheme were up 61 per cent between January and March 2021.

Since it was introduced, 328,506 households have used it to buy a home.

The Help to Buy scheme ended in March, though the government has since launched a new version of the equity loan scheme offering up to 20 per cent outside London - as well as the First Homes scheme which offers a 30 per cent discount to first-time buyers.

“Whether it be Help to Buy, the 95 per cent mortgage guarantee scheme or First Homes – we’re doing everything we can to make home buying an affordable and realistic ambition,” housing secretary Robert Jenrick said.

The government said the value of the properties sold under the Help to Buy scheme topped £90bn. 

DateCompletionsTotal Value of Properties (£m)
2013-1419,6044,022
2014-1527,7286,065
2015-1633,7307,979
2016-1739,80610,464
2017-1848,17613,678
2018-1952,43815,427
2019-2051,37515,645
2020-2155,64917,803
Total328,50691,083

The price of the average UK property rose more than £27,000 in the year to March 2021, which in turn hiked up the cost of Help to Buy loans.

“The way they [the loans] work means the same rising market will have a sting in the tail for anyone who takes advantage,” said Sarah Coles, a personal finance analyst at Hargreaves Lansdown.

“When the loan is eventually repaid to the government, the amount that needs to be paid back depends on the value of the house at that time,” she explained. 

Coles worked out that if a consumer borrowed 20 per cent from the government to buy the average property in May 2015, and then repaid the loan in May 2020, they would have to pay back £5,318 more than they borrowed. 

“The rising market in the past 12 months means that someone doing the same a year later would have had to repay £8,751 more than they borrowed - so the rising market cost them almost £3,500.”

The Help to Buy Isa scheme, which launched in December 2015, closed in November 2019. The government also released figures on the bank account it topped up during this period. It has supported 410,075 property completions, up 23,347 on the previous quarter.

Karen Noye, a mortgage expert at Quilter, said: “While the schemes are well meaning, the figures only further highlight how little the stamp duty holiday supported first time buyers.

“The average Help to Buy purchase price since 2015 is £175,010. This figure has only risen very slightly on the previous quarter, suggesting homes using the Help to Buy scheme have not been impacted as severely by house price inflation. 

“However, it justifies the frustrations of first-time buyers towards the stamp duty holiday as the purchase price is far from the stamp duty threshold, meaning they could never have benefited.”

ruby.hinchliffe@ft.com