Positive step for first-time buyers
2016 will see the end of the Government’s Help to Buy 2 scheme, but increasing amounts of banks are set to continue the idea on private basis.
Many first-time buyers are not in a position to afford a large deposit on their mortgage, resulting in many young people living at home with parents or grandparents for longer. The Government’s Help to Buy 2 scheme has been a leading aid for those struggling to afford the large deposits, with LTV (loan-to-value) mortgages set at 95%, providing greater opportunities for many.
With the Government due to end the scheme in 2016, concern has been raised regarding how many people will manage to acquire a mortgage without the assistance Help to Buy 2 provides. However, it looks as though some banks, such as Santander, will continue providing 95% LTV mortgages to first-time buyers.
A positive consequence of the scheme is that it has highlighted to banks that high percentage LTV mortgages are a positive option that can be used to introduce more customers. Simultaneously it also helps younger people to place their first steps on the housing ladder, gaining greater financial and personal independence.
Government figures show that the Help to Buy 2 scheme helped predominantly first-time buyers, with 82% of the 47,018 properties bought falling into this category. In this way, the project achieved its aim. However, there are concerns that the end of the scheme may result in an increased struggle for first-time buyers. The continuation of the 95% LTV mortgages by banks is a positive result for those unable to afford larger mortgage deposits, however only a select few banks have decided to continue in this way.
Miguel Sard, Managing Director of Santander, agrees that the scheme has made a positive impact for first-time buyers. He has stated that it has ‘been successful in encouraging lenders to re-enter the 95% LTV space and in giving confidence to prospective borrowers who don’t have a large deposit.’
HSBC is another mortgage provider that has chosen to set aside money for the continuation of the high percentage LTV mortgages without government assistance. However, with the government-backed scheme due to finish next year, only time will tell if it has created enough long-term benefits for first-time buyers.
Do you believe more could be done to help first-time buyers? Do you believe the Help to Buy 2 scheme has helped enough in the long term?
Let us know your thoughts in the comments section below.