Jump to content
House Price Crash Forum
subspace

Guardian: Help To Buy Scheme Hits New High

Recommended Posts

More than 4,000 households in England used the government's Help to Buy loan scheme to buy properties in June, the highest monthly total since the scheme began in 2013.

The latest government data indicated more than 4,300 completions during the month, with more than 27,100 homes bought using the scheme. The figures refer to the first phase of Help to Buy, which offers buyers an interest-free loan worth up to 20% of the price of a new-build home.

http://www.theguardian.com/money/2014/jul/31/help-to-buy-scheme-4300-completions-june

Share this post


Link to post
Share on other sites

I read somewhere else that the average LTV for this usury scheme was the highest ever in June at 94.4%.

The scheme is nearly as bad as shared ownership. Only you are borrowing from the government and you will never own your house.

It's disgusting.

Share this post


Link to post
Share on other sites

It befuddles me how unaffordable help to buy is at high LTV ratios. Are ppl (in general) that manic about buying a shoebox that they're happy to commit themselves to decades of debt slavery?

Share this post


Link to post
Share on other sites

7,772 equity loans made in Q2, a new high after Q4 2013 at 7,501 completions. Perhaps it is a feature of the way the quarterly data are collected but the last month in each quarter so far except June '13 (Sep '13, Dec '13, Mar '14, Jun '14) seem to show a spike, so the eyecatching 4,357 completions in June implies a huge run rate but it may drop off substantially in July if the pattern seen to date is repeated.

Edit link to pdf:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/338725/20140731_Help_to_Buy_Equity_Loan_and_Help_to_Buy_NewBuy_statistical_release.pdf

And spreadsheets:

https://www.gov.uk/government/statistics/help-to-buy-equity-loan-scheme-and-help-to-buy-newbuy-statistics-april-2013-to-june-2014

Share this post


Link to post
Share on other sites
Lloyds is set to slash the maximum loan size for all shared ownership and shared equity products - including Help to Buy equity loans - to £150,000.

Previously, all Lloyds brand offering Help to Buy - Halifax and Lloyds Bank - would accept applications for loans up to £500,000 for such products but from tomorrow the maximum loan size for these products will be cut to just £150,000 temporarily.

A spokeswoman for Lloyds says: “We have taken the decision to temporarily cap shared equity and shared ownership lending to £150,000. This is a prudent, short term change that reflects the fact that we currently hold around a 50 per cent share of this market and is a further step to focus our activity on supporting first-time buyers who have limited options to get onto the ladder.

“We remain committed to supporting the affordable housing sector and new build market, recently extending our Help to Buy mortgage guarantee scheme to allow applications for those with a 5 per cent deposit on new build properties.”

London & Country associate director of communications David Hollingworth says the move “changes the face of Help to Buy 1”.

http://www.mortgagestrategy.co.uk/news-and-features/sectors/products/products-news/lloyds-slashes-help-to-buy-1-maximum-loan-to-150000/2012941.article

Share this post


Link to post
Share on other sites
Like MMR does not cover 5 yr fixes, am I right in thinking that MMR for HTB 1 does not consider repayment or charges on the equity part of the deal? Just the mortgage payments on the 75% of the deal for the initial no cost 5 years?

All these coincidences...

Share this post


Link to post
Share on other sites

Lloyds is set to slash the maximum loan size for all shared ownership and shared equity products - including Help to Buy equity loans - to £150,000.

Has anyone seen a new build under £150k since help-to-buy came in? It looks like game over for help-to-buy.

Share this post


Link to post
Share on other sites

Has anyone seen a new build under £150k since help-to-buy came in? It looks like game over for help-to-buy.

You can have a 3 bed for £120k (the RM price is the usual deception some developers use with Help to Buy prices) if you are keen to live in the elbow of a major road interchange and want a 3mx3.5m master bedroom:

http://www.rightmove.co.uk/new-homes-for-sale/property-43065619.html

Edited by Joan of The Tower

Share this post


Link to post
Share on other sites

Like MMR does not cover 5 yr fixes, am I right in thinking that MMR for HTB 1 does not consider repayment or charges on the equity part of the deal? Just the mortgage payments on the 75% of the deal for the initial no cost 5 years?

Just to be clear, even with a 5-year fix an affordability test is still required as prescribed by MMR. However the test for future rises in interest rates is avoided.

I presume the same applies to a HTB equity loan, with only the mortgage element considered (75%). Howeever the lender might take the future equity loan fee into account if (for example) the borrower's income was unlikely to rise in future.

All these coincidences...

The pattern with Lloyds has been:

1) Mid-June: Withdraws lending to non-FTBs under HTB (Equity Loan).

2) Mid-July: Extends lending under HTB (Mortgage Guarantee) to new builds for both FTBs and home movers. Increases max LTV on new builds to 95%.

3) End-July: Limits HTB (Equity Loan) to £150,000 max.

It seems to me that the bank is pushing wealthier new build buyers away from HTB1 to HTB2 where there is more profit to be made. If these buyers are deposit-constrained rather than income-constrained, why not take more money off them?

That's possibly why Lloyds have said the move is temporary - they want to see how business volumes are affected by this strategy.

Share this post


Link to post
Share on other sites

Unless other banks pile in to offer higher limits this will be the death knell for help to buy in London and other high price areas surely? Government will pay up to 15% of deposit if you put down 5% I understand? So, if I am understanding this correctly, if you can borrow £150k and have a 20% deposit this leaves you with an upper limit of around 188k for the purchase?

I was shocked when I recently learnt that HTB2 had no upper earnings limit as well as the 600k upper price - this surely led to the massive jumps where you saw a London zone 3 tiny terrace leap from about 280k to 450k in the space of a year. Great news if it is over.

Share this post


Link to post
Share on other sites

Just to be clear, even with a 5-year fix an affordability test is still required as prescribed by MMR. However the test for future rises in interest rates is avoided.

I presume the same applies to a HTB equity loan, with only the mortgage element considered (75%). Howeever the lender might take the future equity loan fee into account if (for example) the borrower's income was unlikely to rise in future.

The pattern with Lloyds has been:

1) Mid-June: Withdraws lending to non-FTBs under HTB (Equity Loan).

2) Mid-July: Extends lending under HTB (Mortgage Guarantee) to new builds for both FTBs and home movers. Increases max LTV on new builds to 95%.

3) End-July: Limits HTB (Equity Loan) to £150,000 max.

It seems to me that the bank is pushing wealthier new build buyers away from HTB1 to HTB2 where there is more profit to be made. If these buyers are deposit-constrained rather than income-constrained, why not take more money off them?

That's possibly why Lloyds have said the move is temporary - they want to see how business volumes are affected by this strategy.

Yes thank you for the clarification. I was thinking of a previous comment about the crazy affordability of htb and I was referring to the presumable lack of stress testing at 7% scenario not general affordability.

Ditto ignoring the equity loan elephant. Just like shared ownership or interest only, people are hoping they'll do better in the future.

Share this post


Link to post
Share on other sites

Has anyone seen a new build under £150k since help-to-buy came in? It looks like game over for help-to-buy.

The prices have all gone up , Barretts I believe recently reported prices had increased over last year.

It's a huge con the 5% needed for the deposit now is no cheaper than the 10% needed previously.The home builders are laughing all the way to the bank.

Share this post


Link to post
Share on other sites
It's a huge con the 5% needed for the deposit now is no cheaper than the 10% needed previously.The home builders are laughing all the way to the bank.

+1 A lot of people on here predicted this would happen.

But lets face it- the real purpose of help to by was to help the Tories to buy the next election- and I'm not even sure that has worked out for them- instead of a being seen as helping the middle class to afford a home Osborne is seen as inflating prices- not the outcome they had in mind. :lol:

Share this post


Link to post
Share on other sites

But sadly the Labour does not have the guts to remove it so the HtB will continue..

I am just waiting to see HTB3 offering 0% deposit loans..With these parties leading us anything can happen..

Share this post


Link to post
Share on other sites

Spot the difference:

HTB1: interest free

Student fee loans: RPI plus 3%

We can't afford to fund education, apparently.

Spot the pattern:

Help to Buy: props up the assets of an older generation at the expense of a younger generation;

Student fees: shits on a younger generation because an older generation don't want to pay when it's their turn.

Political decision-making has got nothing to do with what the actual thing is being funded, unfortunately. It's purely about who would be on the hook for paying for it.

Share this post


Link to post
Share on other sites
But sadly the Labour does not have the guts to remove it so the HtB will continue..

True- if they pull it they will crash the market- not because it's that big a scheme but because it would be a declaration that the UK government no longer stood behind the housing market.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   205 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.