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Help to Buy mortgage guarantee helping 10% of first-time buyers

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Published: 22 January 2015 | Author: Bernard Clarke

The first year of the Help to Buy mortgage guarantee scheme has seen almost 30,300 home loans completed with the help of the initiative.

As expected, the scheme took time to build momentum, with the number of completions levelling out at approaching 4,000 a month after it had been in place for six months.  With around 80% of loans taken out by first-time buyers, the scheme has funded more than 23,000 purchases by this group in the first nine months of 2014 – or around 10% of the total.

According to data published by HM Treasury, the total value of mortgages supported by the scheme is £4.5 billion.  It is supporting purchases across the UK, but accounts for a higher proportion of all mortgage completions in the North West and the East, and a lower proportion in London and the South East.

As might be expected with a scheme helping first-time buyers predominantly, the mortgage guarantee initiative is being used for loans on lower-valued properties than average.  The mean value of a property bought or remortgaged through the scheme is almost £155,800, compared to a national average house price of £273,000.

The mortgage guarantee scheme opened on 8 October 2013, and the latest data covers the period until the end of September last year, or for almost the whole of the first year of operation.

Although the scheme is open to fund mortgages on homes worth up to £600,000, 98% have been taken out on properties worth less than £350,000 and almost half (43%) on those worth less than £125,000.  The majority of mortgages are on terraced (38%) and semi-detached (35%) homes.

The Help to Buy equity loan scheme has been open for longer than the mortgage guarantee initiative, and has helped fund more than 38,000 purchases in its first 20 months.  In the equity loan scheme, an even higher proportion of purchases are by first-time buyers (83%), and the average price paid is over £211,000.