Help to Buy 2 far off capacity
When introducing the scheme in 2013 Chancellor George Osborne pledged for the government to support £130bn worth of lending in three years, or £43.33bn a year, but in 2014 Help to Buy 2 supported £5.76bn of loans.
Genworth said the scheme is overlooked by banks at 85% and 90% LTV and holds less appeal to building societies.
If the scheme was running at full capacity 255,415 house purchases would take place using just Help to Buy 2.
Simon Crone, vice president for mortgage insurance, Europe at Genworth, said: “Given low rates of house building, it is perhaps a blessing that the market has not been flooded by an extra 200,000 first-time buyers overnight.
“But if careful steps are taken and it is paired with greater house building to guard against house price inflation, our analysis shows that Help to Buy could help restore the first-time buyer market to its former glory.
“If the next government is serious about supporting homeownership in the UK, it must work with the private insurance sector to bed a permanent mortgage guarantee into the market for the long haul, with terms that are more appealing to lenders to encourage wider uptake.”
Help to Buy currently accounts for 81% of high loan to value lending.
First-time buyer purchases are still at a low level on a long-term basis, as 311,400 bought their first home with a mortgage last year compared to over 500,000 per year from the mid-1980s to early 2000s.
The Help to Buy scheme is set to end in late 2016, which Crone said is a worry. He added: “It leaves a big question mark over how access to high LTV loans would survive in a climate of tighter lending restrictions when HTB2 is withdrawn in a little over 18 months’ time. There is little in the data to inspire confidence that 95% LTV mortgages can survive and prosper without some form of support in place.
“Politicians would be naïve to contemplate a bright future for first-time buyers without a permanent scheme that incentivises lending while keeping a close eye on affordability measures.
“The new government must commit to a review of Help to Buy 2 that looks to learn lessons from the experience so far and puts permanent measures in place to prevent the high LTV market falling further back into decline.”