Goodbye, Help to Buy scheme
28th October 2022 11:34
by Myron Jobson from interactive investor
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While not a roaring success, the end of the scheme could not have come at a worse time for first-time buyers.
“While not a roaring success, more than 361,000 properties were bought under the scheme, giving hundreds of thousands of people a leg up on to the property ladder. However, while well intentioned, the scheme had an unintended consequence of artificially inflating portions of the housing market, with developers hiking up prices for their Help to Buy-eligible homes.
“The end of the Help to Buy scheme could not have come at a worse time for first-time buyers, with rising mortgage rates, inflated house prices and the cost-of-living crunch pricing many wannabe homeowners out of the property market.
“The likelihood of higher interest rates to combat soaring inflation means things are set to get tougher from an affordability perspective – with fast-rising rents offering no respite. However, rapidly climbing mortgage rates forcing home shoppers to back off a bit could be the undoing of the surge in property values. It could allow inventory levels to rise and, in turn, result in a transition to a market with lower levels of home price growth.
“As Help to Buy disappears from view, we may see a replacement scheme take its place in the coming months to ease the plight of first-time buyers. The government is busying itself devising a formula to stimulate economic growth ahead of the Autumn Budget – and a robust housing market is a key ingredient to this end.”
Key points:
- Help to Buy: equity loan scheme closes to new applications on 31 October 2022.
- To be eligible for an equity loan, buyers must legally complete by 31 March 2023 and they are expected to have the keys to your home by 6pm.
- From 1 April 2013 to 31 March 2022, 361,075 properties were bought with an equity loan.
- The total value of these equity loans so far totals £22.5 billion.
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