There were 8,018 properties purchased with the government’s Help to Buy equity loan scheme between 1 April and 30 June this year.
This totalled £612m in equity loans and supported the purchase of £2,452m worth of property.
During the second quarter, the total number of completions was down by 26% compared to the same quarter of the previous year and down by 8% compared to Q2 2021 completions of the current scheme only.
Since the scheme started on 1 April 2013 the total value of equity loans is £23.1bn while the value of the properties sold under the scheme totals £103.2bn.
Even co-founder and chief operating officer James Turford says: “While Help to Buy has helped out hundreds of thousands of first-time buyers in the last decade, before it closed for applications, numbers were already dwindling by the end of June this year.”
“The full picture will become clearer when Q3 figures are released, but it looks more like it ended with a whimper than a bang. “
“Buoyed by the stamp duty holiday rush, the scheme saw a recent peak in 2021, and completions have been on the slide ever since. Tighter restrictions on the scheme in April last year took their toll on overall figures.”
“Meanwhile a tougher economic climate this year, with real terms incomes falling, rising mortgage rates and house prices has also clearly had an impact on prospective buyers who hadn’t brought forward their purchases.”
Quilter mortgage expert Karen Noye adds: “This morning’s Help to Buy ISA statistics show that since its inception, the scheme has supported 514,868 property completions – up 16,928 on the previous quarter.”
“The Help to Buy Equity Loan scheme statistics on the other hand, show that the scheme has supported 369,104 property completions since its 2013 inception, 8,018 of which were completed between 1 April and 30 June 2022 – down 26% compared to the same period in 2021.”
“The majority of home buyers using the Help to Buy ISA scheme are aged between 18 and 34, with 65.1% aged between 25 to 34. The median age for a first-time buyer using the scheme remains at 28, two years younger than the average first-time buyer age across the market of 30. While the schemes are well meaning, the figures reiterate just how few first-time buyers are actually supported by them.”
“House prices have grown rapidly over the past couple of years, yet the mean value of a Help to Buy ISA purchase price is just £176,456 compared to an average first-time buyer house price of £246,776 and a national average house price of £295,903.”
“The latest Bank of England interest rate hike will only have served to worsen the position of first-time buyers. Cheap mortgage rates have become a thing of the past, and first-time buyers will now struggle all the more to take their first step onto the housing ladder as they are further priced out of the market.”
“Ultimately, the government needs to plough its energy into building more housing stock as opposed to opening any more schemes as this will truly get to the root of the issue.”
Final applications for the scheme were accepted on 31 October this year and completions for all applications will need to take place before 31 March 2023.
Commenting on the closure of the scheme, Interactive Investor senior personal finance analyst Myron Jobson said the ending of the scheme “could not have come at a worse time for first-time buyers [FTBs], with rising mortgage rates, inflated house prices and the cost-of-living crunch pricing many would-be homeowners out of the property market”.
He adds: “We may see a replacement scheme take its place in the coming months to ease the plight of FTBs.
“The government is busying itself on devising a formula to stimulate economic growth ahead of the Autumn Budget — and a robust housing market is a key ingredient to this end.”
