Help to Buy 2 predicted to close early

Half of brokers and 46% of lenders predict the mortgage guarantee scheme will be withdrawn early, with three quarters of lenders expecting this to happen for remortgages.

Three quarters of brokers and lenders see Help to Buy 2 as the major driver in access to 95% loan to value mortgages improving.

Peter Williams, IMLA executive director, said: “Help to Buy 2 has helped to reopen the higher LTV market after the downturn.

“This has done much to transform the hopes of first-time buyers who can afford a mortgage but struggle to save an initial deposit. There are few clearer drivers for more homes to be built than aspiring buyers returning to the market.

“Whether or not the scheme runs its full course is less important than making sure we have a self-sustaining market in place going forward. The evidence suggests that we have an entrenched mortgage market recovery which can survive its withdrawal.”

Nearly seven in 10 lenders said the scheme had played a key role in boosting the appeal of new build homes through its equity loan offering, while half of brokers also supported this view.

Unattractive mortgage product pricing is the concern which has grown the most since last summer and 51% of brokers said that they saw this as a threat compared with just 36% in July 2013.

Simon Crone, vice president of mortgage insurance europe for Genworth, said: “The difficulties facing first-time buyers have not been resolved by any stretch of the imagination.

“Housing inflation is set to make that first step onto the housing ladder an even greater challenge for many. We need to ensure that responsible borrowers who would struggle to save 10% or 20% deposits are not forgotten when Help to Buy comes to an end especially if this happens sooner than expected.

“Even if Help to Buy 2 fulfils its term and runs until 2016, planning needs to begin now so that change doesn’t upset the balance and lenders don’t desert the market. Lenders and builders need the government to outline its thinking now and present a longer term, viable solution to support responsible borrowers with smaller deposits.”

A number of lenders have launched mortgages at 95% outside Help to Buy, as only 39% see an over-reliance on government support as a worry.

All lenders and nine out of ten brokers see 97% loan to value mortgages as an essential part of a healthy market.