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Looking to speak to Help to Buy borrowers

Journalist: Ruby Hinchliffe, The Telegraph

ended 03. October 2023

Hiya! I'm looking to speak to anyone who has taken out a Help To Buy equity loan and who is now paying interest. Have you been affected by negative equity? Are you facing arrears? An FOI we received shows thousands have fallen into arrears in recent years: https://www.telegraph.co.uk/money/property/first-time-buyers-forced-sell-up-unaffordable-help-to-buy/

Also a question to brokers – why is this happening? Should the Government have done more to warn borrowers of the risks if interest rates shot up? As the interest rate increases every year in April, by adding the Consumer Price Index (CPI) plus 2%…

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Richard Campo
Founder at Rose Capital Partners
Thankfully we aren't aware of any of our clients falling behind on their Help To Buy loan.
However, the risks were always there and we have been here before with schemes like Shared Appreciation mortgages that were around in the late 90s.
Since HTB was introduced it has been a perfect storm of house price growth and hyper inflation.
Over the last 5 years house prices on a national average are up 20.4% according to the Nationwide's house price index, meaning if you took a £100k HTB loan that is now worth £120,400 to be repaid.
Equally, inflation 5 years ago averaged 2.46% according to the Consumer Price Index. So the HTB rate in 2018 of 4.21% looked fine (CPI + 1.75% in year 1), whereas today you will actually be paying 8.8% as CPI stands at 6.8%.
In 2018 no one was talking about, or expected, inflation to be such a factor, but as HTB is linked to 2 indicies that you can't control - House Prices and Inflation - this was always going to be a risky venture.