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Help to Buy effect is muted on basis of numbers, says CML

Published: 29 May 2014

The combined impact of both the Help to Buy equity loan and mortgage guarantee schemes does not appear to be creating an amplifying effect on the more active parts of the UK housing market, according to CML analysis of new government data.

New government figures show that, to date, only 4% of all mortgages for house purchase have involved either of the Help to Buy products (mortgage guarantee or equity loan) over the period April 2013 to March 2014.

The table below shows a cumulative summary of Help to Buy transactions to date, compared with the wider mortgage market across all loans for house purchase over the same period. It is worth noting that the overall average property value for first-time buyers over this period was £188,600 - very similar to the overall Help to Buy property value of £190,200.

Help to Buy and wider mortgage market summary, April 2013 - March 2014

Scheme HTBMG HTBEL All HTB All house purchase
Number of completions 7,313 19,401 26,714 636,100
Average (mean) value of property £151,597   £204,805   £190,200    £243,600
Percentage of FTBs 79% 88% 85% 45%
Percentage outside London and SE   80% 76% 77% 70%

However, the impact of Help to Buy varies considerably on a regional basis. For example, the active London market accounted for 13% of all loans for house purchase between April 2013 and March 2014. However, London accounted for only 6% of all Help to Buy (equity loan and mortgage guarantee) transactions.

By value, 45% of properties bought involving a Help to Buy mortgage guarantee were for properties costing up to £125,000. Only 7% of Help to Buy transactions were for properties costing over £250,000.

Commenting on the new data, CML director general Paul Smee said:

"Broadly, we should be reassured by the latest data on Help to Buy. The policy appears to be reaching the geographical parts of the market where recovery has been weakest, while accounting for only a small proportion of business in those areas where the market is more active. On the basis of these figures, the scheme appears to be successfully reaching its target group of creditworthy borrowers who would otherwise be unable to buy until they had accumulated a more significant deposit. Lenders are always mindful of what their customers can afford.

"Throughout the UK, the proportion of business accounted for by Help to Buy has to date been modest overall. Any worry that the scheme risks stoking a housing boom fortunately does not seem to be playing out in practice so far."


Notes to editors

1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 95% of all residential mortgage lending in the UK. There are 11.2 million mortgages in the UK, with loans worth over £1.2 trillion.

2. A new set of data tables will be published on the statistics section of our website.

3. Government Help to Buy statistics are available from the Treasury - Help to Buy Mortgage Guarantee Scheme quarterly statistics: October 2013 to March 2014 and DCLG - Help to Buy (equity loan) scheme monthly statistics.

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