Help To Buy Needs To Be Replaced According To Experts
According to some property experts the failure to replace the "Help to Buy" scheme with something similar could bring the property market to a halt and possibly put the first time buyer market back into decline. The scheme is scheduled to run until 2020 on brand new homes but will come to an end for second hand homes in 2016.
Mortgage brokers and estate agents are concerned that the failure to extend the scheme or replace it with a similar product will put the market into reverse because first time buyers simply will not be able to raise the required deposit to buy a home.
If the government was to extend the Help to Buy it would mean that the tax payer is in effect providing an indemnity policy to all the buyers that use the scheme. Whilst the scheme was only intended to get the market moving again there is concern that the market will not be able to cope when it is withdrawn.
It is a sorry state of affairs if the only way you can buy a home now is of you are able to get your deposit from the state. Some people believe that the Help To Buy scheme is a form of quatitative easing for the housing market and now the government is going to have a problem when the tap is turned off.
The IMLA which is the body that represents mortgage brokers said that 75% of lenders and 65% of brokers believed that the property market would suffer when the scheme is withdrawn. Most brokers and lenders are of the opinion that property ownership would suffer unless the help to buy scheme is replaced. The mortgage market has now recovered from the financial crisis but the interest rates offered for those with a 5% deposit are much higher than for those buyers with a 10% deposit.
The help to buy scheme breathed new life into the market and has made the market much more competitive with banks competing with each other. This is healthy competition but is not a surprise particularly when tax payers are on the hook for the deposits of many first time buyers that are using help to buy. More building societies are now offering 95% loans outside of the mortgage scheme but this could be jeopardised when help to buy comes to an end.
Without access to a lump sum or from the bank of mum and dad the outlook for some first time buyers is bleak according to Shelter the housing charity. It argues that the cot of a home is way out of kilter with the earning power of most first time buyers and more needs to be dome to build more social housing.