First-time Buyers

Help to Buy equity loan completions near 30,000

Samantha Partington
Written By:
Samantha Partington

The government’s Help to Buy equity loan scheme has helped just under 30,000 households purchase a property since it launched 15 months ago, statistics have shown.

Government figures revealed that from 1 April 2013 to 31 July this year, 85% of those sales went to first-time buyers for homes typically priced at around £209,000.

Wiltshire, Leeds and Central Bedfordshire were the three local authorities with the highest Help to Buy 1 scheme usage.

Analysis by the Mortgage Advice Bureau revealed the average mortgage size taken using the scheme was £140,000, 2% less than June’s average loan size and 15% below the market average.

Its research found the average purchase price is slightly less than the Department of Communities and Local Government, at £194.547.

At the end of July, Lloyds Banking Group changed its lending policy to cap the maximum loan size which could be taken under the Help to Buy equity loan scheme and any other shared ownership schemes to £150,000.

It said the measure was a ‘prudent’ temporary change which reflected the fact it held around 50% of that market.

With users of scheme typically taking out a mortgage of £140,000 it seems the Lloyds cap will have little effect.

Andy Frankish, new homes director at Mortgage Advice Bureau, said: “When news of Lloyds’ temporary cap on Help to Buy lending broke, many cynics proclaimed this the death knell for the government scheme.

“However, our data shows that the average Help to Buy 1 customer is already borrowing £10,000 less than this limit, so should other lenders follow suit, this would actually have little impact on most borrowers.”

Frankish said London would be the exception but larger Help to Buy equity loans were still available from alternative lenders.

The equity loan is available at up to 20% of the value of a new-build home worth up to £600,000 for all buyers with a 5% deposit.