Average Help to Buy 2 deposit falls to under £9,000

Emma Lunn
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Emma Lunn

Home buyers using the Help to Buy mortgage guarantee scheme were able to access the property ladder with average deposits of just

This is a 3% decrease since August – when the average Help to Buy 2 deposit was £9,229 – and significantly lower than September’s purchase market average of £67,929 (-87%).

Compared to a typical purchase price of £226,641 in the wider market, Help to Buy 2 applicants paid an average of £150,488 in September: the lowest price recorded in four months and a 6% decrease since August (£159,527).

MAB said this suggested the scheme was hitting the mark in terms of attracting less affluent buyers who were looking to purchase lower-priced first homes.

The average loan-to-value (LTV) for a mortgage guarantee applicant was 94% – just 1% below the scheme’s limit – in comparison to 70% in the rest of the purchase market.

The fall in the average Help to Buy 2 deposit has occurred because consumers using the scheme in September opted for lower cost properties, while also making the most of the scheme’s 95% maximum LTV limit.

As a result, they also borrowed less: the average Help to Buy 2 loan was £141,514 in September, 6% below August’s figure of £150,298 and almost £20,000 less than the typical house purchase loan in the wider market (£158,712).

The significantly smaller deposit required for a Help to Buy mortgage guarantee loan makes the burden of saving far easier for stretched first-time buyers.

Brian Murphy, head of lending at MAB, said: “The Help to Buy mortgage guarantee scheme continues to fill a void in the market in terms of affordability, offering a realistic way into the property market for buyers who are unable to save a large deposit.

“The generosity of the 95% loan-to-value associated with the scheme is clearly not being abused: lower earners are using the scheme to purchase lower-priced properties and are taking on much smaller levels of debt as a result.

“Our data shows that even those aspiring owners who haven’t begun the task of saving until now can still feasibly become homeowners through the scheme in a relatively short space of time, while sharing the deposit with a partner or friend could reduce this period of saving to under a year.”

Prime Minister David Cameron praised the success of Help To Buy last month while the latest figures showed that almost 53,000 households have bought a home in England through Help to Buy; 37,600 households bought new-build homes through the equity loan and NewBuy options, and a further 15,000 though the mortgage guarantee.