Mortgages

Scrapping Help to Buy risks "significant mortgage market disruption": IMLA

Rozi Jones
|
12th October 2018
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"We are concerned that funding for HTB is due to be withdrawn in 2021, and that there has as yet been no clear signal as to what, if anything, might replace it."

Mortgage lenders are urging the government to provide clarity around the future of the Help to Buy scheme, warning that withdrawal of funding for Help to Buy "would risk significant mortgage market disruption".

The Intermediary Mortgage Lenders Association notes that the scheme has been well-supported by its members and has had "significant success", resulting in almost 170,000 new homes being built and purchased in England, 81% of which were by first-time buyers.

Furthermore, it is estimated that nearly half (43%) would not have been able to purchase their home without HTB assistance. IMLA says this has been a "major contributor" to restoring UK-wide first-time buyer lending to pre-crisis levels, with approvals to the group up more than a third (34%) since the scheme began.

IMLA has warned the government against a "policy cliff-edge that would leave many first-time buyers unable to secure a mortgage".

Kate Davies, executive director at IMLA, commented: “We are concerned that funding for HTB is due to be withdrawn in 2021, and that there has as yet been no clear signal as to what, if anything, might replace it.

“Given its success - and its importance in boosting both home ownership and housing supply - we believe that some form of government support should continue.

“Lenders and borrowers place heavy reliance on the scheme, and a major step-change to arrangements would risk significant market disruption and potentially undermine the Government’s ambitious targets for new housing supply.

“If changes to the scheme are being proposed, lenders will need appropriate notice in order to plan ahead and deliver positive outcomes – hence our wish to have clarity as soon as possible on the Government’s intentions.

“We look forward to hearing the Government’s plans and to working closely to continue the development of what has become a key element of housing policy.”

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