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Help to Buy keeps the UK Housing Mortgage Market Alive Two Years On

Housing-Market / UK Housing Sep 30, 2015 - 12:51 PM GMT

By: MoneyFacts


The Help to Buy Mortgage Guarantee Scheme will soon be celebrating its second birthday. Phase two aimed to help borrowers who have a 5% deposit buy a home by giving lenders a Government-backed guarantee of 15% of the mortgage.

Since its launch in October 2013, the 95% loan-to-value (LTV) mortgage market has changed dramatically, and data from has revealed that not only are there now lower rates available for borrowers with small deposits, but there’s also far more product choice.

Charlotte Nelson, Finance Expert at, said:

“The Help to Buy Mortgage Guarantee Scheme has brought many happy returns to small deposit holders. The scheme was designed to boost lending at 95% LTV, which is often considered the lifeblood of the mortgage market, and two years on, it’s clear that it has succeeded, with the number of homes being sold as a result of the guarantee hitting 56,401*.

“Borrowers looking at the market today will see that their wish for more choice and greater competitiveness has been granted: rates have fallen dramatically, with the average two-year fixed rate mortgage at 95% LTV falling by 0.65% in just two years.

“The launch of Help to Buy acted as a crucial catalyst, promoting the acceptability of lending at this level again. It also prompted lenders outside of the scheme to drop their rates in order to remain competitive.

“However, with more choice on the market, borrowers need avoid being sucked in by the branding of the Help to Buy scheme, as many will actually now find better deals elsewhere. For example, by opting for lowest five-year fixed rate at 95% LTV instead of the lowest Help to Buy rate, a borrower could save £308.76** in repayments in just one year.

“Borrowers with small deposits should think about taking advantage of the great rates and numerous deals now, if they haven’t already. The Help to Buy Mortgage Guarantee Scheme is due to end next year, and only time will tell whether its removal will extinguish the competitive flame in the 95% mortgage market.”

*HM Treasury: Help to Buy mortgage guarantee scheme Quarterly Statistics.

**Based on a £150,000 mortgage over 25 years on a repayment only basis. - The Money Search Engine is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

© 2005-2022 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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