Data from the broker’s National Mortgage Index shows the average house purchase using a ‘Help to Buy 2’ mortgage was £151,021 in April 2014.
Four years have passed since the average first time buyer paid a comparable sum to buy their first home (£151,000 in March 2010 according to the Office of National Statistics’ House Price Index).
This average has since risen by 27% to £193,000 in March 2014, leaving a 22% difference between today’s typical first time buyer purchase and that using a Help to Buy 2 mortgage.
It suggests the scheme is facilitating modest house purchases by aspiring homeowners – significantly below the level that has become normal in a climate where many first time buyers have to rely on parental support to raise a deposit.
The National Mortgage Index shows the average LTV for a Help to Buy 2 mortgage is currently 92.5%, while in comparison the latest CML figures show the average LTV across all first time buyers is 81.3%.
On a £151,021 property, this makes the difference between needing a deposit of £11,326 (through Help to Buy) or £28,241 (the first time buyer average).
Government figures show the majority (82%) of Help to Buy purchases using the mortgage guarantee are being made by first time buyers, with 85% outside of London and the South East.
Brian Murphy, head of lending at Mortgage Advice Bureau, said that these findings suggest that mortgages at 90% and 95% LTV are being used carefully and responsibly through Help to Buy to give first time buyers an option that was in danger of becoming extinct.
He said:
“The Bank of England and government are coming under increasing pressure to take the heat out of sectors of the housing market, but writing off a scheme that is aiding those who most need it – predominantly first time buyers with modest levels of deposit – is not the way to go about it.
"Lending standards have been carefully monitored ever since the recession, and the new mortgage rules [under the Mortgage Market Review] mean that scrutiny of borrowers’ finances remains rigorous and thorough with careful consideration given to the impact of future interest rate rises.
"Providing this continues, there is a strong argument to support the availability of mortgages with far more realistic deposit requirements than has become the norm in an increasingly lop-sided housing market, especially for aspiring first-time buyers.”
