High awareness of UK govt’s Help to Buy mortgage guarantee scheme, research finds

The early launch of the Help to Buy mortgage guarantee in the UK has seen it overtake Help to Buy equity loans in terms of public awareness, according to new findings from the Mortgage Advice Bureau.

The research comes as the latest figures show that both schemes are proving popular with home buyers with thousands securing loans in the first four weeks of the mortgage guarantee scheme alone.

More than one in three adults, some 37%, had heard of the equity loan scheme in September, compared with 32% for the mortgage guarantee. Since then awareness of Help to Buy’s second phase has leapt to 43% following its launch in October, while the level of recognition for the equity loan scheme has remained the same.

The research also found that the awareness gap is even more pronounced among people looking to get a new mortgage in the next year, with the guarantee enjoying 52% awareness compared with 41% for equity loans.

Help to Buy equity loans are available exclusively for new build properties, while the guarantee supports mortgages of up to 95% on either new build or existing homes.

‘The Help to Buy mortgage guarantee has enjoyed the lion’s share of attention in recent months, but let’s not forget the equity loan scheme has made a great first impression with arguably the biggest initial impact of any government housing scheme in recent memory. The arrival of the guarantee now means buyers have two government assisted routes to help them secure a mortgage on a newly built home,’ said Andy Frankish, new homes director at the Mortgage Advice Bureau (MAB).

‘Buying a new home with an equity loan is certainly a different proposition to a 95% mortgage and calls for specialist advice, which is why MAB refers all interested parties to its dedicated brokers who deal exclusively with new homes. What we have seen in its first six months is that the equity loan scheme has made new properties affordable to thousands of people at very competitive rates, giving homebuyers extra incentive to consider the benefits of buying new,’ he explained.

He also pointed out that the construction industry is primed for a return to growth thanks to Help to Buy. ‘What’s needed now is lenders’ continuing support for the new build sector up to 2016 and beyond. This will be vital to sustain the appeal of new builds, support the construction recovery and give Britain the new homes it needs to satisfy home owning ambitions,’ he added.

Figures from the UK government show that 18,050 reservations were made in the first seven months of the Help to Buy  Equity Loan scheme. In the first six months of the scheme 5,375 sales have been completed.

The figures also show that the average price of the properties sold under the scheme in the first six months was £197,167, compared with the average house price in the UK of £247,000 in August 2013. Also the majority of completed sales were to first time buyers, representing 92% of total sales and 71% of sales were made with a 5% deposit.

over 2,000 offers were made through the Help to Buy Mortgage Guarantee scheme in the first month since it was launched, three months ahead of schedule.

House builders are using this momentum to build more homes. Taylor Wimpey who revealed this week that they have fully sold their completions for 2013. Overall over 900 house builders have registered for the scheme, 94% of which are small and medium house builders.

Paul Smith, chief executive offiver of haart, said that the figures for the take up of the first stage of Help to Buy are really encouraging especially for first time buyers.

'The early introduction of Help to Buy’s second Guarantee phase at the start of October is proving to be a real fillup to the property market as it allows movement at all rungs of the property ladder, including both older and new homes. Coupled with continuing low interest rates and strong mortgage deals, sellers should pay heed and capitalise now on the very high levels of demand. Buyers are ready and waiting for properties so there is no better time to sell,' he explained.

Frankish pointed out that the new scheme is working across the country, not just in London and anyone weighing up the appeal of Help to Buy can benefit from clear, consistent messages about what deals are available and whether they qualify for the scheme.
'The government should be applauded for taking the initiative to rebuild confidence and capacity in the new homes market. The fact that a developer like Taylor Wimpey has already sold 30% of the houses it plans to build next year should spur developers on to add weight to the momentum and take the supply of housing to the next level,' he added.