Help to Buy scheme and 90 per cent mortgages return
Help to Buy scheme and 90 per cent mortgages return — but more affordable homes are urgently needed
The urgent delivery of affordable homes is key to the countrys recovery after Covid-19, but house price falls alone will not make homeownership more accessible for young people.
Over the last 20 years house prices in the country have outpaced earnings. Average wages have risen 98 per cent while property values jumped 302 per cent.
As a result the average home now costs 12 times the average salary, not taking furloughed or cut wages into account.
Although experts have forecast house price falls of between five and 10 per cent this year, compared to a two per cent drop in earnings for those still working, lending has become stricter.
“The pandemic will of course impact low- and middle-income earners most, many of whom will be first-time buyers.
Even if house prices do fall, it’s likely some lenders will react by tightening criteria.
Another concern is that prospective buyers who had been squirrelling away a deposit have dipped into it to survive the lockdown, just as the minimum deposit required has gone up.
Extending Help to Buy
So what is being done to get the market moving? For starters, lending is beginning to ease.
As the country emerges from the worst of the pandemic, some lenders have reintroduced mortgage products at 90 per cent loan-to-value, which is a good start for first-time buyers.
Help to Buy loans have made a comeback, too. This is the shared equity scheme where the buyer has to raise a five per cent deposit, then borrows 55 per cent from the bank and the Government lends the remaining 40 per cent of the value.
As of May 1, first-time buyers could access two-year and five-year fixed Help to Buy loans through Santander. More lenders followed suit — and the Government is reportedly in urgent talks with housebuilders about extending the initiative beyond its cut-off next year.
Is shared-ownership the answer?
Shared ownership has been growing in popularity over the last 10 years. Those with a household income of less than ÂŁ90,000 can apply to buy a stake in a property while they rent the remaining share from a housing association and stump up a much smaller deposit.
Shared-ownership registrations have soared since the market reopened, up 167 per cent last week compared to the first week of the lockdown, according to the website Share to Buy.
This is down to some mainstream lenders raising deposit requirements up to 15 per cent. This makes the average deposit for a shared-ownership home is ÂŁ12,935.
Planners quicken the pace for new homes applications
A total of 20,000 new homes were started in the year to March — up from 16,364 in 2018/2019 but still less than a third of London Mayor Sadiq Khan’s annual target of 65,000 new homes.
Councils are working so hard to process existing [planning] applications
