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End of Help to Buy

Journalist: Frances Ivens, Telegraph

ended 16. September 2022

This is Money/ MailOnline journalist writing a piece on what schemes are available for first time buyers

With the deadline for applications for the Help to Buy scheme fast approaching, first time buyers are facing an increasingly hostile environment with rising house prices, interest rates and an ongoing cost of living crisis with consumer inflation. 

What is the outlook for first time buyers? Has there been a fall in mortgage applications from this group? Are more lenders offering 95% LTV in order to attract these buyers?

9 responses from the Newspage community

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Graham Cox
Director at Bridging Hub
The only thing schemes like Help to Buy and Joint Borrower Sole Proprietor mortgages do are help prop up unsustainable property prices. They address the symptom, not the underlying problem which is that prices have become decoupled from average wages. Put simply, house prices are too high and increasingly unaffordable, particularly now that interest rates are shooting up. Extending lending multiples and coming up with more first-time buyer schemes is storing up trouble. Truss needs to ramp up house building rapidly, include house prices in the 2% inflation target, and grow the economy so wages catch up. That's how we make housing affordable again, not through another first-time buyer scheme that encourages people to pay through the nose for an over-priced rabbit hutch.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Houses prices have shot up double digits in the past 12 months. This isn't good for first time buyers. However, with wages rising quickly and the housing market likely to slow over the next 12 months, they could catch back up. Lenders are offering a variety of 95% mortgages, including joint borrower/sole proprietor mortgages that allow a parent to boost your chances of obtaining what you need. Despite the state of the economy and the effect this will have on the housing market, I expect products to this group of customers to maintain their numbers. It will be interesting to see if the new Chancellor gives any incentives away to housebuilders in the forthcoming mini-Budget. This could be a catalyst to the growth in this area.
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Mike Staton
Director at Staton Mortgages
Getting onto the property ladder is proving harder and harder, as a 5% deposit can only stretch so far. A lot of lenders cap their affordability at 4 times income at 95% LTV. Unfortunately, average house prices for first time buyers are on average 5.5 times their income, so the figures just don't stack up. With the cost of living increases being factored into affordability and house prices increasing quicker than salaries, the 5% deposit market is not the greatest of places to be at the moment. Throw into the mix interest rates in excess of 4% and I would not want to be a first-time buyer with a 5% deposit at the moment. Something does need to be done in order to help this part of the market as first-time buyers make up half of the mortgage market at present.
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Rob Peters
Principal at Simple Fast Mortgage
Help to Buy may be dead but the first time buyer mortgage lives on. Whilst is is undeniable that the Help to Buy scheme has contributed to an uptick in house prices, it has also helped over 350,000 first time buyers get a home they might not otherwise have had. Many aspiring home owners will be saddened to see Help to Buy end but there are other solutions available, albeit admittedly none as cheap as Help to Buy. There are 95% mortgages available from highstreet lenders. Buyers can consider an equity loan from a variety of alternative lenders, many who offer on non-new build to properties, and not just to first time buyers either. Modern lenders also offer mortgages for multiple applicants to support mortgage affordability and can chose to participate in the property value via a deposit loan or regular contributions. We have also seen an uptake in equity release where parents are providing an 'early inheritance' to be used as a home deposit.
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Imran Hussain
Director at Harmony Financial Services
The outlook for first-time buyers is higher than ever before no schemes no problem, as many are still saving a 5% deposit or more as the help to buy equity loan scheme was not really ideal for lower-income earners as many are now finding that they are unable to repay the 20% EQUITY loan now that property values have gone up since their initial purchase and they are now up the creek by paying a mortgage and a loan back and it was only aimed at new build we need incentives for sellers to bring some more stock to the market especially as we are not building enough houses.
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Mark Robinson
Managing Director at Albion Forest Mortgages
Despite all the doom and gloom, our enquiries from first-time buyers have remained high. Most of our clients are from this segment of the market and are still moving ahead with their purchases. I keep saying this, but with rent prices going through the roof, and the availability of rental properties falling due to landlords getting out of the game, renting is an even less attractive proposition than it already was. As a result, many are finding their way onto the property ladder faster. The Bank of Mum and Dad is certainly helping more often, and we are seeing a dramatic spike in Joint Borrower Sole Proprietor Mortgages, with parents using everything from savings to equity release to help their children.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
Both the mortgage industry and first-time buyers seem to be taking the end of Help to Buy in their stride. There are more 95% LTV mortgage options available without help to buy, such as through the deposit unlock scheme. It's not all a bed of roses, though. One issue is that these are higher loan to value mortgages so are significantly more expensive than the old help to buy rates, which were priced more or less the same as a deal with a 25% deposit.
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James Miles
Director - Mortgage Adviser at The Mortgage Quarter
Unless Liz Truss pulls something unexpected out the bag, you won't be getting any help from the Tory government anytime soon as the Help To Buy scheme has flown the nest. The good news is that there a still plenty of lenders wanting to lend, although they are understandably being cautious due to the outlook on spiralling living costs. The availability of mortgages requiring a 5% deposit is strong and shared ownership is playing a key role in giving buyers a leg-up onto the property ladder. If you are looking to borrow more due to the rise in house prices, consider joint-borrower sole-proprietor mortgages and remember you can have more than two incomes on a mortgage. The biggest hurdle is having a deposit in place, so if you cannot rely on the 'Bank of Mum and Dad' save as much as you can, talk to a reputable mortgage broker and run through all your options as it may not be as far away as you think.
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Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
I don’t think the outlook is great for first time buyers with their only saving grace being the few mortgage companies being those specialised in helping them achieve their dream homes. But for the market as a whole 95% products are few and far between and with the increasing interest rate rises this is making mortgages unaffordable for these first time buyers due to the monthly payment amounts when only 1 year ago they might have been eligible. The government really do need to make more of an effort to help first time buyers and this should not be left down to the smaller mortgage providers and equity loan provides who I must say are doing a fantastic job!