The government has confirmed the Help to Buy: mortgage guarantee scheme will finish at the end of 2016.
In a letter to Mark Carney, governor to the Bank of England, Chancellor Philip Hammond said the scheme had achieved its aims, and would stop accepting new loans at the end of the year.
The scheme was launched in 2013 with the intention of high loan-to-value mortgages. The Chancellor stated the scheme had achieved its aim, having helped over 86,000 households.
In his letter to the Bank of England, Hammond outline changes that have occurred in the mortgage market.
He wrote: “There are now over 30 lenders offering 90-95% loans outside the scheme. This reflects the fact that the scheme was introduced with a specific purpose that has now been successfully achieved and, as such, I can confirm that it will close to new loans at the end of 2016 as planned.”
Richard Sexton, director at e.surv, said: “To date, the government has demonstrated enthusiasm in its appetite to support the housing market. This U-turn by the Chancellor begs the question of whether a change of emphasis is afoot. A fluid housing market is key to the overall health of the economy, and supporting first time buyers onto the property ladder is critical to achieving that.
“The early success of the scheme led many high street lenders to include higher LTV products in their offerings. With this in mind, the withdrawal of Help to Buy may not have a dramatic an impact on the market. However, lenders who made plans to include the scheme as part of their product range may now have to revise their strategies.
“It will be interesting to see how this move affects transaction levels over the coming months, and how lenders and borrowers alike react to the change. While the housing market is certainly on the road to recovery, we are not out of the woods yet, and the industry and the government need to work together to ensure the market remains accessible to those looking to take their first steps onto the ladder.”
Hammond underlined the government’s continued commitment to the overall Help to Buy programme and other policies designed to boost the housing market.