Help to Buy surged at the end of 2020
There was a 40% rise in properties bought with a Help to Buy loan between 01 October and 31 December 2020 compared to a year earlier, according to government figures.
It said 21,026 properties were bought with an equity loan during the fourth quarter of last year.
But the rise failed to make up for lost sales earlier in the year, with a total 49,714 sales under the scheme in 2020, down 5% from 2019.
That takes the total number of properties bought with a Help to Buy loan since the scheme launched in April 2013 to 313,043.
The vast majority of completions – 82% – are by first-time buyers.
The average property purchased with a Help to Buy loan in the last three months of 2020 cost £320,741.
Sarah Coles, personal finance analyst, Hargreaves Lansdown, said: “The speed of price rises means that many of those racing to save a deposit are running to stand still: their target percentage of the property price is still as far out of their reach as ever.
“Those who’ve used Help to Buy loans to overcome the hurdles are storing up a separate problem, because when the loan is eventually repaid to the government, the amount that needs to be paid back depends on the value of the house at that time.
“If you borrow 20% of the purchase price, you repay 20% of the value after five years, so when prices rise, so do your repayments.”
Coles added that those saving to get onto the property ladder could consider a Lifetime ISA, where the Government tops up your savings by 25% to use a deposit for a home.