Ryan Bembridge analyses the plethora of schemes aimed at first-time buyers entering and leaving the dysfunctional mortgage market
Help to Buy Mortgage Guarantee
The Help to Buy Mortgage Guarantee scheme, also known as Help to Buy 2, launched in October 2013 in response to reluctance from big banks to lend at higher loan-to-values. It offers a guarantee of up to 15% of the property’s value.
Looking at Prudential Regulation Authority and FCA data the scheme did fire up higher LTV lending. Lending between 90% and 95% LTV made up just 1.7% of new mortgage lending in the second half of 2013 before rising to 3.1% in Q1 2014, 4.1% in Q2 2014 and 4.0% in Q3 2014.
The cost of high LTV lending also came down. Moneyfacts data shows rates on offer in March from lenders independently of the scheme ranged from 3.4% to 4.5%.
Rob Ashley-Roche, principal of Rest Assured Mortgages, admits he’s a fan of the scheme. “It not only got more lenders involved in 95% LTV lending and lowered rates,” he says. “It also led to falling rates at 90% and 85% LTV.
“It helped the first-time buyer market pick up. I’m completing one now for a waitress at my local pub with Barclays.”
