More than 2,000 use Help to Buy mortgage scheme

 

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The Independent Online

More than 2,000 people have put in offers on homes during the first month of the Help to Buy scheme, under which the taxpayer guarantees up to 15 per cent of mortgages, David Cameron will say today.

The Prime Minister is hosting a reception at 10 Downing Street for some of those accepted for a total of £365 million of home loans in the early days of the controversial three-year offer in an effort to highlight its benefits.

Under the latest phase, rushed forward three months as part of a Conservative response to the rising cost of living, people can buy properties worth up to £600,000 with a deposit of only 5 per cent.

Almost three-quarters of customers were looking to buy their first home.and the majority were couples applying with a joint salary of under £50,000 and borrowing around £159,000.

So far, just a handful of lenders have launched products under the latest phase, led by the UK's state-backed banks.

But others, such as Santander and Barclays, have announced they intend to participate.

Liberal Democrat Business Secretary Vince Cable and the boss of state-backed lender Lloyds however have been among those raising the alarm about over-inflating prices.

The chairman of the Council of Mortgage Lenders has warned the market risks becoming "addicted" to the flagship scheme unless a clear exit strategy is set out.

And Commons treasury select committee chairman Andrew Tyrie last week called on the Bank of England to shed more light on what powers it has to stop a house price bubble.

Number 10 said the average £900 monthly repayment represented 24% of borrowers' gross income - in line with the Council of Mortgage Lenders' historical average for the UK.

And fewer than a quarter were for homes in London and the South East, where house prices have rocketed.

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