The second phase of Help To Buy allowed roughly 2,000 people to complete the purchase of a home in its first month, according to new figures.
The majority of them were young adults buying their first ever home, yet other demographics have made use of the scheme as well. The average value of property deals approved using this phase of Help to Buy was £163,000.
David Cameron has been shouting these statistics from the rooftops in recent weeks, citing them as justification for moving the scheme forward.
Guarantees
The second phase of Help to Buy, which involves taxpayers guaranteeing up to 15 per cent of mortgage loans, was originally meant to begin in January. However, it was rushed into place by the Prime Minister, who claimed to be “impatient to help young people get on the housing ladder”.
The idea of the scheme is to make lenders more willing to grant mortgage loans to buyers with small deposits. It states that the government will cover up to 15 per cent of any losses caused by a homeowner defaulting on their mortgage or selling at a loss. It is available on all homes costing up to £600,000 and lasts for the first seven years of a mortgage deal. It is not applicable to second homes.
Impact on the property market
Speaking in September, shortly before the launch of Help to Buy Phase II, David Cameron argued that he had always wanted the scheme to be introduced as soon as possible.
“What concerns me is that you can't buy a house or a flat even if you are doing okay, you have got decent job prospects and good earnings. I am not prepared to be a prime minister of a country with caps on aspiration,” he said.
Early figures suggest that the scheme is opening up Britain's housing market to more people, but there are still worries about the long-term effect it will have on asking prices.
Business secretary Vince Cable is amongst those to have shared fears that Help To Buy will send property values through the roof. He has argued that it will boost the demand for homes across the country at a time when the supply is still poor – a sure-fire recipe for a housing bubble.
Ultimately, this would undo the positive impact of Help to Buy and leave homeowners in all sorts of financial woe.
House prices have risen rapidly in some parts of the UK ever since the first phase of Help to Buy was introduced, but the government has dismissed fears of a bubble, citing stable property markers in other parts of the country as evidence.
Nevertheless, experts in the housing industry have labelled the next few months as what could be one of the best opportunities to get on the housing ladder for a long time.
With that in mind, those who want to take advantage of this controversial scheme might be well advised to do so as soon as possible.