Demand for Help to Buy may be reaching a peak after data shows that house price growth is slowing and even decreasing.
So far as many as 48,393 homeowners made up of first time buyers and home movers have used the government Help to Buy scheme, including the equity loan and mortgage guarantee schemes.
However, new data released by the Treasury shows the numbers using the mortgage guarantee scheme have reduced from 4,026 in May to 3,892 in June.
Of the total, 29,829 homeowners have used the equity loan part and 18,564 the mortgage guarantee part accounting for 6% of the property market.
Help to Buy and how they work
The first part of the Help to Buy scheme is called equity loan where the government offers a 20% of the property value as an interest free loan available on new build properties only.
You only need to find a small 5% deposit and the remaining 75% is provided by a mortgage from a lender for properties valued up to £600,000.
Phase two is the mortgage guarantee scheme available for both first time buyers and home movers on both new-build and existing homes.
For this phase you only need a 5% deposit and must arrange a 95% mortgage from a lender. The government have an agreement with the lender and guarantee them 15% of the property value rather than provide you with a loan.
Properties can be valued up to £600,000 but these schemes are not available for second homes, switching remortgage buyers or buy-to-let investors.
Help with the deposit for a new home can come from family members as the equity release buyer can access wealth using a lifetime mortgage and give to a child or grandchild.
UK house prices slowing
Both the Halifax and the Royal Institution of Chartered Surveyors (RICS) have indicated that the property market is slowing.
RICS latest survey has said the number of houses agreed in August is lower for the first time in two years. In particular the London property market is weaker as homes become unaffordable.
Surveyors are now expecting house price rises to be faster outside of London which has suffered from a reduced number of new buyers and longer processing time for sales due to tougher affordability tests by lenders.
The Halifax has said that the average house price is now £186,270 rising only 0.1% month on month. August year on year is higher by 9.7% compared to the July figures of 10.2%.
Lower mortgage rates have helped the market but with interest rates likely to rise the demand for property is likely to reduce, cooling the market.
What are your next steps?
Speak to our LCM mortgage advisers if you are planning to move home, buying your first home, remortgaging your existing home to a new cost effective mortgage deal or are a buy-to-let investor.
Learn more by using the mortgage cost calculators, equity release mortgage calculator and property value tracker chart. Start with a free mortgage quote or call us and we can take your details.
For equity release buyers our London City Mortgage brokers can recommend lifetime mortgages allowing you to receive cash from your property to repay an interest only mortgage and help maintain your standard of living as costs rise.
Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.
