According to analysis of housing market figures by PricedOut, a campaign for affordable house prices, first-time buyers would be better off renting than buying a house under Help to Buy.
They claim that interest rates are so high under the Help to Buy mortgage guarantee scheme that the monthly repayments for the average first-time buyer in England and Wales with a 5% deposit are more expensive than the monthly rent on an average home.
In order for it be more financially viable to use Help to Buy prices would need to increase by 6% per year in the North West, 34% in the South West and 28% in London.
They say that unless house prices rise more than expected it would be cheaper for people with a small deposit to continue renting and use the difference to keep saving.
PricedOut warns that the government is putting families under pressure to get on the ladder by taking on unmanageable debt.
PricedOut spokesman Dan Wilson Craw said: “This analysis suggests that Help to Buy will not help the average first time buyer, despite the government’s insistence to the contrary.
“When tenants see house prices rising they will feel pressure to take advantage of a 95% mortgage, but in doing so, many will find themselves overburdened with debt and will be paying vastly more than they would in rent, particularly in the South.
“And that’s even before you consider the impending interest rate rises a few years down the line.
“The millions of us renting want to be able to buy our own home eventually but, with house prices too high, all David Cameron and George Osborne have offered us is a Ponzi scheme to pull the wool over our eyes and help inflate the value of their London property portfolios even further.
“Continuing to rent and save appears to be the better option for most tenants.”
