Help to Buy slows for fifth straight month

New data released from the Mortgage Advice Bureau has given reason for concern over the Government’s Help to Buy scheme.

According to the figures, the Help to Buy equity loan scheme for new homes has experienced five straight months of completions declining on a year-on-year basis.

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The data shows that there were 4,628 Help to Buy completions in the first quarter of 2015, which indicated the slowest quarter since the third period of 2013, which was the first full quarter of the scheme. On a year-on-year basis, completions fell by 17%.

However, more of a concern is the fact that completions in quarter one of this year fell by a substantial 43% in comparison with the final quarter of 2014.[1]

Private rise

Despite this concerning slide, statistics show that private enterprise completions are actually rising. During quarter one of 2015, there were 25,970 private enterprise housing completions, representing a 14% increase from the same period last year, when 22,710 projects were completed. This also represented an increase of 7% from quarter four of 2014.[1]

Equity loan completions for the first quarter of 2015 accounted for 18% of the total of private enterprise completions. This was down by 7% on the same period last year.[1] This highlights the drop of in the role of Help to Buy in the private housebuilding sector.

Reaching target audience?

In the face of this fall in activity, data from the Mortgage Advice Bureau also shows that the scheme does continue to find its target audience. The National Mortgage Index found that that the average Help to Buy customer in quarter one of this year was 31.9 years old. This was 5.5 years younger than the average homebuyer across the market as a whole.[1]

It was also found that the average Help to Buy customer earns 11.5% less income than the market average. Their average salary was found to be £33,441, in comparison to the market average of £37,767.[1]

Help to Buy slows for fifth straight month

Success?

Andy Frankish, new homes director at the Mortgage Advice Bureau, feels that, ‘the Help to Buy equity loan has been a great success for helping first-time buyers and those with lower incomes get onto the housing ladder.’ He suggests that, ‘the drop in completions over the last few months at a time when total house building is on the up suggests lenders are putting their weight behind new builds without needing the Government incentive.’[1]

‘It is certainly positive for the economy that house builders no longer look quite so dependent on Help to Buy to grow the housing stock,’ continued Frankish., more asking, ‘would house building rise faster if more can be done through Help to Buy?’[1]

Frankish believes that, ‘if the scheme was being used to its full capability with better promotion of the scheme on a national level; it would not only help those still struggling to access the housing market but provide a much needed push for house building which is still a great concern and a long way off target.’[1]

[1] http://www.propertyreporter.co.uk/finance/htb1-grinds-to-five-month-slowdown.html