Conservative Government start the second phase of Help to Buy early

It has been confirmed that the help to buy scheme which plans to make it easier for new home buyers to get a mortgage will start from next week.

The second phase of the Help to Buy scheme, allowing people to get 95% mortgages, wasn’t due to start until January 2014.

The Help to Buy initiative aims to make it easier to afford a deposit for a new build property.

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Midlands has highest take up of Equity Loans

Interesting to see the highest uptake of Help to Buy equity loans was in the Midlands. Part of the reason the government was keen to promote the Help to Buy Equity Loan Scheme, was to encourage the market outside of the capital. By boosting not just building, but also investment, one of the central tenets, of the Help to Buy scheme has so far been succesful.

Pressure mounts on January 2014 Deadline

As this blog has repeatedly stated, the amount of pressure on the Government over the Help to Buy scheme has been steadily increasing over time. Since the first stage of the scheme opened in April, reports suggest over 10,000 people have signed up for the equity loans. In January 2014 the second stage of the scheme, and the most controversial, will launch- with over £130 billion of government backed mortgages on new and existing properties up for grabs. The government continues to be placed under pressure with accusations of promoting a “housing bubble”.

Erik Pickles, the communities and local government secretary, has been vocal in supporting the scheme. He said : “This government’s package of measures to boost the housing market is working, with house building and housing supply on the up. The tough decisions we’ve taken to tackle the deficit are now delivering a sustainable increase in housing and providing real help to hard-working people.”

While it is good to hear the government defending the scheme there may come a time when the pressure is too great and the scheme withdrawn. For this reason, and for the opinions stated in this blog previously, if you are considering applying for a mortgage guarantee in January- I would not wait. Macro economic considerations are for the economists- for homebuyers who can afford a 5% deposit and the subsequent repayments – The Help to Buy scheme is an opportunity you do not want to miss.


Government Help to Buy Scheme – Will it Work ?

Official figures now show the UK economy is in recovery. GDP doubled to 0.6 per cent and all the main sectors of the economy- Services, Manufacturing, Construction and Agriculture all contributed. One of the strongest recoveries however has been seen in the Property market with the construction figure of 0.9 per cent growth likely to be revised and recently the NHBC reporting new home registrations at their highest since 2008.
Many questions have been labelled at Help to Buy, and of course there are risks to the wider economy in time – but one of those has just been answered. Will it work.

Help to Buy versus Negative Press

This website seeks to provide an independant resource with unbiased advice for the Help to Buy scheme. That said, I feel recently a landslide of bad press for the scheme has confused the public. One of the most frequent questions we receive to the site is , “Is Help to Buy a good thing?”. If you are looking to purchase a property, especially for the first time, and cannot afford the deposit – providing all your other finances are in place – it is UNDOUBTEDLY a good thing. The Government is trying to help people like yourselves to climb that first hurdle which has been made more difficult due to banks unwillingness to lend, coupled with increasing house prices.

The confusion around the scheme comes not from a participants point of view, but from a wider macro view over what the scheme might do to the economy as a whole. The Help to Buy scheme itself will be of great value to first time buyers who could not previously secure a mortgage yet often pay more out in rent than a standard repayment package. The effect on the economy of helping hundreds of new buyers onto the property market and encouraging banks to lend will be positive in the short term.

The argument against Help to Buy – and again I stress this is a macro economic debate and should not concern the individual participant – is that the Help to Buy scheme may contribute to another housing bubble. The argument goes that as more people enter the market- house prices rise ( and they are already at extreme levels compared to earnings ) and another credit bubble similar to the Sub Prime mortgage situation in the US, happens here.

While I believe it is right that the Help to Buy scheme be scrutinised the bad press seems to have drown out what is a positive scheme for individuals desperate to buy their first home. Help to Buy is a short term scheme that offers the opportunity to get on the housing ladder, it is worth consideration.