The second phase of Help to Buy has been brought forward from January 2014 with details due to be announced this week and it has resulted in a lot of interest, according to the study from the Mortgage Advice Bureau, the UK’s leading independent mortgage broker.
It is particularly generating interest among young people. More than one in three adults below 30 have ambitions to buy their first home before the end of 2016 while more than a quarter plan to move house. Indeed, young adults show the biggest change in attitude towards property purchases as a result of Help to Buy, in line with the government’s aim to support first time buyers.
Almost one in three 18 to 29 year olds are more likely to buy a new build home now that government support is available compared with 13% of all adults. The Help to Buy equity loan has already impacted activity in the new build market with over 12,500 reservations in its first five months.
Unlike part one of the Help to Buy scheme, the new mortgage guarantee offering loans of up to 95%, is available on all property rather than just new build homes. One in five young adults already say they are more likely to buy a second hand home as a result of Help to Buy compared with 12% of all adults.
Ahead of the launch of the mortgage guarantee public awareness of Help to Buy trailed behind shared ownership schemes and Right to Buy. Among home owners and those actively looking to buy a home, 77% were aware of shared ownership schemes while 59% knew about Right to Buy. In contrast, 37% had heard of Help to Buy equity loans while 32% knew of Help to Buy mortgage guarantees.
Awareness of Help to Buy was significantly higher among adults below 40, who are more likely to be furthest down the property ladder. Some 42% of adults aged 18 to 39 knew of the equity loans compared with 31% of those aged 40 and over, and 36% had heard about the mortgage guarantees compared with 28% in the older age group.
Awareness was greater among men than women. Some 42% of men knew about the equity loans compared with 34% of women and the same percentage was familiar with the mortgage guarantee compared with 28% of women.
The research also found that home ownership ambitions are strongest among 18 to 24 year olds. It remains an important goal for 79% of UK adults with 55% feeling it is very important. And there is little sign of the younger generation abandoning this goal. Some 83% of those aged 18 to 24 feel that home ownership is an important goal with 57% feeling it is very important. Just 1% of 18 to 24 year olds feel home ownership is not important at all and just 5% of all adults.
‘It’s clear that consumers are crying out for better access to mortgages and the second part of Help to Buy brings existing properties into play alongside newly built homes. It means the appeal of government support will extend to a wider audience which can only help towards fulfilling home owning ambitions,’ said Brian Murphy, head of lending at the Mortgage Advice Bureau.
‘There is a big difference between an equity loan and a 95% mortgage, so anyone looking to buy needs to understand the pros and cons to decide which option suits them best. Lenders will need time to finalise their offers, but competition is sure to improve. The Help to Buy guarantee will ultimately improve the availability of genuine, affordable 95% mortgages, products which are an essential part of a healthy, sustainable market,’ he explained.
‘Raising a deposit is the biggest challenge buyers face and the guarantee will help them over this initial hurdle, leaving them with monthly payments they can afford. It will also mean home owners with limited equity have better prospects of moving up the property ladder, which in turn frees up more homes for first time buyers,’ he added.
