Almost 7000 register for Help to Buy
Since its launch in this year’s budget, thousands of prospective homebuyers have been seizing the opportunity to buy a new-build home with a deposit as low as 5% and over 1,000 sales have already been completed.
Prisk said: “With almost 7,000 reservations in three months it’s crystal clear that the Help to Buy equity loan has captured the public’s imagination and is getting Britain building again which will help achieve a long-term, stable housing market.
“So any credit-worthy buyer, whether a first-time buyer or someone looking to move up the property ladder, should contact their local Help to Buy agent and see if they could benefit from the scheme.”
Under the scheme buyers receive a 20% equity loan interest free for 5 years which helps them buy a new build property from a participating housebuilder with a value of up to a £600,000.
By extending support to existing homeowners as well as first-time buyers the scheme is helping to remove a bottleneck in the market where homeowners want to move but may be struggling to raise a large enough deposit to purchase their next property.
Mr Prisk said the success of the Help to Buy equity loan was delivering a surge of business to house builders and showed the huge appetite and pent up demand for homeownership among the public.
The Help to Buy equity loan will help up to 74,000 homebuyers over the next three years which represents 2% of the 3.4 million property transactions that the office for budget responsibility estimated will take place over the same period so it is unlikely the scheme will have any material effect on house prices.
The scheme, which will be administered by the Treasury and begin in January 2014, will enable lenders to use government-backed guarantees to offer £130bn worth of mortgages with smaller deposits on new and existing properties.
Where properties are bought under this option, the government will provide security for the loan, so if the house is then sold for less than the outstanding mortgage total the lender will be able to recover its loss.