The Help to Buy mortgage guarantee scheme will be no more as of 31 December 2016, the UK Government has announced.
The news, likely to be of disappointment to budding first-time buyers, was confirmed by Chancellor Philip Hammond in a letter sent to the Bank of England on Thursday 29 September.
The letter pointed toward an increase in confidence in the property market as the key reason for the scheme’s demise. It stated that the scheme would not be extended due to lack of necessity in the current market.
Paul Smee, Director General at the Council of Mortgage Lenders (CML), welcomed the news.
He said that: “Mortgages for those with small deposits are now becoming more common outside the scheme”.
However, looking back upon the scheme’s initial success, he described Help to Buy as being “a welcome leg-up to many creditworthy buyers who may not otherwise have been able to get a foothold on the property ladder”.
The scheme has made high loan to value (LTV) mortgages more accessible to Britain’s first-time buyers since its introduction in 2013.
Its instant success was replicated by numerous high street lenders, many of whom have launched high LTV deals of their own in recent years, outside of the scheme.
However, critics of the Chancellor’s Help to Buy U-turn have suggested that the demise of the scheme could bring about a significant ‘change of emphasis’ in the mortgage market.
Richard Sexton, Director at independent surveyors, e.surv, has said: “To date, the Government has demonstrated enthusiasm in its appetite to support the housing market. This U-turn by the Chancellor begs the question of whether a change of emphasis is afoot.
“A fluid housing market is key to the overall health of the economy, and supporting first-time buyers onto the property ladder is critical to achieving that.
“Lenders who made plans to include the scheme as part of their product range may now have to revise their strategies. It will be interesting to see how this move affects transaction levels over the coming months, and how lenders and borrowers alike react to the change”.