We need a permanent solution to the FTB dilemma

Bob Hunt

March 5, 2015

Peter Williams is executive director of the Intermediary Mortgage Lenders Association


It is safe to assume that many of the 40,000-plus borrowers who have taken advantage of the Help to Buy mortgage guarantee scheme would have struggled to make headway in the housing market without it. While other lenders are offering 95% loan to value mortgages outside of the scheme, even the combination of Help to Buy and non-Help to Buy activity still falls short of supporting the number of first time buyers that were able to achieve their property owning ambitions before the recession. This scheme is currently scheduled to close at the end of 2016. 

Homeownership is continuing to fall among young people and it is vital that government works with industry to establish a permanent solution to the first time buyer dilemma. Increasingly demanding capital requirements make it ever more difficult to lend to first-time buyers without large deposits. Unless the Help to Buy mortgage guarantee evolves into a permanent feature of the market, there are legitimate concerns among the industry that the revival of first time buyer lending will prove short-lived. Regulatory pressures now are firmly stacked against a mass market for high LTV loans even though these have been the bedrock for the first time buyer market for some considerable time. 

There are a host of issues that need fixing in the housing market, and politicians must seize the 2015 election as a chance to start what will be a long term project.

Part of the solution must be a permanent mortgage indemnity guarantee to boost lending to first time buyers, which will also encourage builders to maintain and improve the supply of new homes. We are now getting close to half way in the life of the current scheme. In our view though recognising it has been very helpful the time for short-term sticking plasters has passed and future generations are relying on today’s political leaders to take a long-term view on how best to support high LTV loans given the regulatory changes now in place.


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