Housing Solicitors

The Mortgage Advice Bureau has claimed that the coalition government’s Help to Buy scheme is working by helping buyers sidestep escalating house prices across the UK.

In the last year, house prices across the UK have risen by 9.1% overall, with house prices in London rising by as much as 18%. Critics of the Help to Buy scheme say it is helping fuel house prices and creating a property bubble in the UK.

The Help to Buy scheme is designed to help first-time buyers get on the property ladder and existing homeowners move to a new home. Under the Help to Buy scheme, the government guarantees part of the mortgage and homeowners only need a 5% deposit.

The Mortgage Advice Bureau is a leading independent mortgage broker, which claims that first-time buyers purchasing a new home under phase 2 of the Help to Buy scheme are able to avoid rising house prices by helping buyers purchase a new home at 2010 prices.

The Mortgage Advice Bureau’s National Mortgage Index shows that in April 2014, the average house purchase under the Help to Buy scheme was estimated at £151,021.

The bureau says that the average price paid by a first-time buyer rose by 27% by March 2014, compared with an average of £151,000 paid for a house in March 2010 according to the Office for National Statistics House Price Index.

There is a 22% difference between the average price paid for a house today and the house purchase under the Help to Buy scheme – making today’s average house purchase price nearer 2010 levels under Help to Buy.

Head of lending at the Mortgage Advice Bureau, Brian Murphy, said

“These findings suggest that mortgages at 90% and 95% LTV [loan to ratio value] are being used carefully and responsibly through Help to Buy, to give first-time buyers an option that was in danger of becoming extinct.

“Providing this continues, there is a strong argument to support the availability of mortgages with far more realistic deposit requirements than has become the norm in an increasingly lop-sided housing market – especially for aspiring first-time buyers.”

The loan to ratio value (LTV) of a property is the amount of the loan compared with how much a property is worth and the difference is usually expressed as a percentage. In property bubbles – when house prices escalate fast – the LVT can increase. However, when interest rates rise and mortgage repayments increase, if property prices fall the LTV can become lower.

In extreme cases, homeowners with large mortgages can find themselves in negative equity, meaning that the value of their property is less than their mortgage. This can happen when homeowners find themselves unable to meet mortgage repayments and re-mortgage to release capital from their property to pay off existing debts or pay for repairs to their home.

Bank of England Governor Mark Carney recently indicated, however, that interest rates were unlikely to rise for another year.

Duncan Lewis Housing Solicitors

Duncan Lewis housing solicitors can advise on a wide range of housing matters, including debt and mortgage repossession.

Duncan Lewis housing solicitors can also advise on Local Authority housing, housing possession, disrepair of rental property, Landlord & Tenant disputes and housing benefit.

For expert help with housing law, contact Duncan Lewis housing solicitors on 020 7923 4020.