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New Challenge for First-time Buyers as Help-to-Buy is Ended

Chancellor Philip Hammond has confirmed that the Help to Buy scheme will not be extended beyond the end of 2016, creating concerns for first-time buyers looking to purchase.

Chancellor Philip Hammond has confirmed that the Help to Buy scheme will not be extended beyond the end of 2016, creating concerns for first-time buyers looking to purchase.

In a letter to the Bank of England, Mr Hammond stated his belief in the scheme’s success and that he felt it had done its job in helping first-time buyers to get onto the property ladder.


The scheme has helped buyers with a five percent deposit to purchase their first home, thanks to the government providing a guaranteed 15 percent of the property value, enabling more mortgage lenders to accept the loans.


Since it launched in 2013, the scheme has helped over 90,000 households buy their first home with an average purchase price of £157,000 on properties valued to an average of £216,000.


Industry experts have warned that ending the scheme would lead to less loans offered to those with a lower deposit amount available, with mortgage lenders also asking for the scheme to be replaced to prevent a decline in demand within the market.


The financial data firm Moneyfacts reports that the amount of 95% loan-to-value mortgages available, including packages that carry the Help-to-Buy mortgage guarantee, has already decreased from 270 in March to 225 in August 2016.


Commenting on the Chancellor’s decision, Rachel Springall from Moneyfacts, said:


‘Life is about to become more difficult for first time buyers. Lenders which were happy to offer these loans because of the government guarantee will become more reluctant. Mortgage for those with small deposits are likely to become more scarce, and more expensive – as there will be less competition.’


The end of the Help-to-Buy scheme is the latest news to present first-time buyers with a greater property challenge.


Earlier this week, the Royal Institute of Chartered Surveyors (RICS) revealed that there is now an undersupply of property available for private rental, as well as property available for purchase, with demand for rental properties now outstripping supply.

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