First 10 Help to Buy purchases complete

The latest phase of the government's Help to Buy mortgage guarantee scheme, launched a month ago, has already seen the first 10 home purchases completed, according to new figures from the first two lenders involved.

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Royal Bank of Scotland (which owns NatWest) and Lloyds Banking Group (which lends though the Lloyds Bank, Halifax and Bank of Scotland brands), have received a combined 2,384 applications since Help to Buy was extended to all buyers and all types of homes on October 8.

These applications could turn into mortgages worth up to £365m, and have already led to more than 2,000 offers and 10 completed purchases.

Stephen Noakes, mortgage director at Lloyds Banking Group, said: “We’ve been able to help our customers with our participation in schemes such as Help to Buy.”

The first phase of Help to Buy was launched in April, but only provided help to first-time buyers buying new-build homes. The extended scheme, on the other hand, is open to all buyers and for all types of property, and is designed to encourage lenders to offer 95% mortgages.

To qualify, you simply need to be buying a property that is not worth more than £600,000 and to have a deposit of at least 5%.

The government will then guarantee up to a further 15% of the property's value, in return for a fee from the lender offering the mortgage deal. Most of those taking advantage of the scheme so far are first-time buyers keen to get a foot on the housing ladder.

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Prime Minister David Cameron said: “In just one month, over 2,000 people have been accepted for a Help to Buy mortgage. “Most Help to Buy applicants are first time buyers, young and have a roughly average household income. This is all about helping hardworking people get on the first rung of the property ladder – and helping them get on in life.”

Government statistics also show that a typical Help to Buy applicant has an annual household income of around £45,000 and will be signing up to monthly mortgage payments of about £900 – or 24% of their gross incomes.

These findings are supported by figures from RBS, which said the majority of applications had come from young couples with a joint salary of less than £50,000 and that the average price of the property being bought was £167,565.

They should help to stem worries about people overstretching themselves with 95% mortgages, which have been linked to the banking crisis that caused the credit crunch and subsequent recession.

However, critics have expressed concerns that Help to Buy could create a housing market bubble that will make it even harder for cash-strapped first-time buyers in the future.

The latest figures from the Office for National Statistics suggest average house prices in the UK have now recovered from the falls caused during the recession.
And the most recent housing market monitor from Nationwide Building Society indicates that prices are now 5.8% higher than they were a year ago.

Labour is therefore calling for the Bank of England to review the scheme immediately, rather than waiting for a year to check its impact on the housing market.

Prices are not going up everywhere, though. While the London property market is booming, the value of houses and flats in other parts of the country are rising much more slowly, or even falling in some cases.

The government also argues that it is working to ensure that more affordable homes become available via the initial stage of the Help to Buy scheme, which has prompted more than 15,000 reservations for newly built homes.

It expects the extended version of the scheme to expand rapidly as lenders such as HSBC, Barclays, Santander and Virgin Money release Help to Buy mortgages over the next few months.

In the meantime, some of the first people to take advantage of Help to Buy have been invited to Downing Street to meet with Cameron.

Among those attending today’s get together are first-time buyer Louise Cox, a 26-year-old police officer from Bedford. She said: “I have been saving to buy a house for approximately four years. I have been struggling to save a 10% deposit, especially because I want to buy on my own.
“Now I have found a house and am hoping to move in by the beginning of December.”
Nanny Stacey Judge and her boyfriend Ryan Parks, a 24-year-old welder, will also be at the meeting with the Prime Minister.

Judge, also 24, from Maidstone in Kent, said: “We have been saving for a while now and have been working really hard to get enough money for a deposit.

“We were both very happy to qualify for the Help to Buy scheme as we are now on the property ladder and have a lovely house much earlier than expected.”

You can find out more about Help to Buy and buying your first home at our MoneySuperMarket first-time buyer hub.

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