"The Committee judges that the closure of the scheme would unlikely, in current market conditions, to affect significantly the provision of finance to prospective mortgagors"
During its third annual review of Help to Buy: Mortgage Guarantee scheme, the FPC found that use of the scheme has "declined significantly". In Q1 2016, loans in the scheme accounted for 3% of total mortgage lending for house purchase and 25% of lending above 90% LTV, compared to 6% and 70% respectively in 2014.
In a letter to the Chancellor, Mark Carney noted that high-LTV lending as a whole has not declined, meaning more lending is taking place outside of the scheme.
Carney added that the fees are not low relative to market pricing, stating that interest rates on 95% LTV mortgages in the scheme have been marginally higher, on average, than comparable loans outside it.
Carney added: "Given the decreasing usage of the scheme over time, the Committee judges that the closure of the scheme would unlikely, in current market conditions, to affect significantly the provision of finance to prospective mortgagors, including high LTV borrowers.
In the letter, he said that the Committee will continue to monitor any potential risks arisng from the scheme, including its conclusion, and may make further recommendations at any time if it judged that circumstances have changed.
