According to figures from the Home Builders Federation Show, on average 500 people per week are reserving homes under the government’s Help To Buy Scheme.
The scheme allows anyone buying a new home worth up to £600,000 to put a 5% deposit down, with the government providing up to a further 20% as a loan.
Mortgage brokers and lenders are concerned that the scheme risks driving house prices up as demand outstrips supply. Conversely HBF is confident that the industry will be able to increase the supply of new homes.
The second phase of Help to Buy is expected in January 2014 when the government will give a guarantee to lenders to provide mortgages where the loan to value ratio is high (i.e where there is a small deposit). Should the borrower default, the government will cover some of the losses incurred by the lender.