First-time buyers will be hit hard by the expiration of the Help to Buy mortgage guarantee scheme at the end of the year, the Intermediary Mortgage Lenders Association has warned.
First-time buyers will be hit hard by the expiration of the Help to Buy mortgage guarantee scheme at the end of the year, the Intermediary Mortgage Lenders Association has warned.
The association reckoned the end of the scheme will dampen down first-time buyer affordability by reversing improvements in high loan-to-value lending.
Peter Williams, executive director of IMLA, said: “The winding up of the Help to Buy mortgage guarantee scheme at the end of this year could remove the buoyancy aid that is record affordability.
“Great strides were made in 2015 to drastically reduce the price of high LTV loans, but without a form of guarantee in place, lender appetite could sink.”
The government has moved the goalposts on Help to Buy before, as the Help to Buy equity loan scheme was originally due to end in 2016 but was extended to run until 2020.
IMLA also looked at the implications of the government’s changes to buy-to-let. From April the market will have to cope with a 3% stamp duty surcharge and the amount of higher rate tax relief landlords will be able to claim back will be reined in from 45% in 2017 to 20% in 2020.
The trade body said the private rental sector will see higher rents because of the changes, while the dampening effect on the market will result in buy-to-let remortgage lending reaching 60% of total buy-to-let lending and 33% of all remortgaging.
Williams added: “The PRS is a vital part of the jigsaw in the UK housing market. Tenant demand is only going to rise as the population increases and we will need landlords to provide the rental properties to satisfy this need.
"The need for a properly joined-up strategy to meeting housing needs across all tenures in the UK has never been greater.”
Mortgage affordability is at an all-time high, as repayments are currently lower than typical rents in every region of Britain.
