The scheme enables first-time buyers to buy a house with a 5% deposit. It was introduced because few lenders used to offer first-time buyers high loan-to-value (LTV) mortgages. The chancellor. Philip Hammond. Believes that this situation has changed, saying:
“The high LTV mortgage market has become less reliant on the scheme as confidence has returned. There are now over 30 lenders offering 90-95 per cent loans outside the scheme.”
The Help to Buy scheme insured lenders against risks on high LTV mortgages, but lenders must now carry this risk themselves. While this could result in lenders not offering 90% to 95% mortgages, experts believe that many will continue to do so.
A borrower can take out mortgage protection insurance policy to cover mortgage payments if they are unable to work through sickness or injury.
Andrew Tyrie, chairman of the Treasury Committee, welcomed the end of the Help to Buy scheme because he blamed it for inflating house prices. He urged the government to tackle the shortage of new homes.
The government continues to support first-time buyers by providing loans for newly built properties. The Help to Buy ISA helps young people save by adding a 25% tax free sum to the ISA fund when it is used to buy a home.