Ryan Bembridge analyses the plethora of schemes aimed at first-time buyers entering and leaving the dysfunctional mortgage market
Today’s mortgage market is very different from a decade ago. In 2006 there were 1.1 million mortgaged transactions for house purchase, but 2015’s figure stands at just 679,300.
True, the market has recovered somewhat from 2009 when there were 512,500 transactions for house purchase but what’s clear is the market is nowhere near as busy as it once was.
Today’s generation of buyers face spiralling house prices with Nationwide’s annual housing inflation peaking at 11.5% in the second quarter of 2014 caused by an imbalance of supply and demand.
UK housebuilding only rose slightly to 156,000 in 2015, though in 2004 the Barker Review of Housing Supply said around 250,000 homes needed to be built every year to prevent spiralling house prices.
Indeed, with the lack of supply governor of the Bank of England Mark Carney has spoken of the housing market having “deep, deep structural problems”.
Since the financial crisis, and quite rightly some might say, lending has been tightened up with the introduction of the Mortgage Market Review from the newly formed Financial Conduct Authority.
But while the government has embraced the stricter affordability requirements that came with the MMR, it has also moved to support high loan-to-value lending to help beleaguered first-time buyers get their first step on the ever inflating housing market.
It has launched the Help to Buy Mortgage Guarantee, the Help to Buy Equity Loan scheme, the Help to Buy and Lifetime ISAs and the Starter Homes Initiative.
Whether these initiatives are papering over the cracks is yet to be seen but in the short-term it seems they have helped buyers borrow at higher loan-to-values.
Indeed, Council of Mortgage Lenders data reveals there were 312,500 first-time buyer transactions in 2015 with an average LTV of 83%, up from 196,700 mortgages at 75% LTV in 2009.
But this is still a far cry from 2006 when there were 402,800 transactions with an average LTV of 90%. 
