Help to Buy: More than 7,000 homes sold under guarantee scheme

wotsthat

Surprised this hasn't had a mention after all it's the first comprehensive data released since the scheme launch.

http://www.bbc.co.uk/news/business-27608313

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/315426/PU1666_Help_to_Buy_mortgage_guarantee_scheme_quarterly_stats.pdf

- only 7313 mortgages completed in first 6 months of scheme

- 80% were FTB's

- mean property value £151k

- 95% of sales outside London

Much afroth about nothing?

PasturesNew

Mean borrower incomes were high.... £40-55k mostly (p. 8) -- although £80k in London.

HAMISH_MCTAVISH

wotsthat wrote: »

Much afroth about nothing?

Absolutely.

PasturesNew wrote: »

Mean borrower incomes were high.... £40-55k mostly.

Yet nearly half the sales were for houses below 125K.....

Help To Buy 2 may be doing many things, but with 95% of sales outside London, nearly half of sales for less than 125K, and it accounting for only a tiny percentage of mortgages issued in every region, blowing bubbles ain't one of them....

Graham_Devon

Depends how you look at the figures really.

Firstly help to buy 2 is a tool of huge sentiment. This is backed up by Economists...

Economists warned that focusing just on the Help to Buy data risked understating its impact on confidence.

Rob Wood, UK economist at Berenberg bank, said the scheme fuelled expectations that house prices would only go up. “Curtailing the scheme – in any way – would send a strong worthwhile signal,” he said.

Secondly, if you look at FTB numbers, in March, 10% of FTB's took a loan via HTB2.

Add on those taking advantage of HTB1 and you have what, 20-30% of FTBs using a government scheme to buy a home. Would need to look at the numbers for HTB1.

When you consider the importance of FTB's in the market, allowing chains to move, the impact could be significant to the overal market, even though the actualy numbers for HTB2 are low.

So HTB2 could support several transactions from just one buyer right through the chain.

Couple of people interviewed by Radio 5 who have bought a home under HTB2 suggest a couple of percent increase in interest rates over the next 3 years could provde "difficult" though they think they will cope. Better than watching prices rise.

Overall, the only thing HTB2 does is increase demand. This will push prices up. It does absolutely nothing for supply, unlike HTB1.

Worth also noting the pace of the increase in numbers as the months pass. Out of the 6 months measured, the first month only covered 4 homes. In the second month measures 164 homes. But by the 6th month, were up to 2,647 homes. The figures are only really relevant for 4 out of the 6 months.

If that trend continues the numbers will be VERY significant.

wotsthat

Graham_Devon wrote: »

Depends how you look at the figures really.

Firstly help to buy 2 is a tool of huge sentiment. This is backed up by Economists...

Secondly, if you look at FTB numbers, in March, 10% of FTB's took a loan via HTB2.

Add on those taking advantage of HTB1 and you have what, 20-30% of FTBs using a government scheme to buy a home. Would need to look at the numbers for HTB1.

When you consider the importance of FTB's in the market, allowing chains to move, the impact could be significant to the overal market, even though the actualy numbers for HTB2 are low.

So HTB2 could support several transactions from just one buyer right through the chain.

Couple of people interviewed by Radio 5 who have bought a home under HTB2 suggest a couple of percent increase in interest rates over the next 3 years could provde "difficult" though they think they will cope. Better than watching prices rise.

Overall, the only thing HTB2 does is increase demand. This will push prices up. It does absolutely nothing for supply, unlike HTB1.

Worth also noting the pace of the increase in numbers as the months pass. Out of the 6 months measured, the first month only covered 4 homes. In the second month measures 164 homes. But by the 6th month, were up to 2,647 homes. The figures are only really relevant for 4 out of the 6 months.

If that trend continues the numbers will be VERY significant.

It's 7000 small loans in 6 months.

Maybe it'll become significant in the future but so far it's nothing.

Thrugelmir

Despite ever increasing prices. Sales volumes are heading down as mortgage approvals are certainly in decline. Maybe things are finally plateauing off.

Graham_Devon

wotsthat wrote: »

It's 7000 small loans in 6 months.

Maybe it'll become significant in the future but so far it's nothing.

7,317 loans in 6 months. Yes.

Thing is, 1,000 of them were in the first 3 months.

The remaining 6,000 were all taken out in the last 3 months of the report.

As I say, I don't believe 10% of FTB's buying through HTB2 is that insignificant. Esepcailly when you add on the FTBs buying through HTB1.

Suddenly, you have a significant percentage of FTB's using a variant of HTB.

The income figures are rather surprising though, I thought they would be lower, but it appears this is generally helping out those with higher than average household incomes. Which is some comfort when it comes to the taxpayer being guarantor, as at least the income to loan ratio appears to be around 3.5x in most cases.

wotsthat

Graham_Devon wrote: »

7,317 loans in 6 months. Yes.

Thing is, 1,000 of them were in the first 3 months.

The remaining 6,000 were all taken out in the last 3 months of the report.

As I say, I don't believe 10% of FTB's buying through HTB2 is that insignificant. Esepcailly when you add on the FTBs buying through HTB1.

Suddenly, you have a significant percentage of FTB's using a variant of HTB.

The income figures are rather surprising though, I thought they would be lower, but it appears this is generally helping out those with higher than average household incomes. Which is some comfort when it comes to the taxpayer being guarantor, as at least the income to loan ratio appears to be around 3.5x in most cases.

If I was vehemently anti HTB I'd be laughing these figures off as insignificant and asking the question why the government bothered with it in the first place.

antrobus

There has been much rhetoric on the scheme in recent weeks and the dangers of causing a housing bubble, but Help to Buy remains a small proportion of total sales in the housing market and has no real impact in London, which is seeing higher inflation.

Charles Haresnape of Aldermore Bank.
http://www.telegraph.co.uk/finance/personalfinance/houseprices/10862051/Help-to-Buy-a-lifeline-for-first-time-buyers-outside-London-Treasury-figures-show.html

Help to Buy irrelevant to London bubble

Robert Peston
http://www.bbc.co.uk/news/business-27621408

Thrugelmir

wotsthat wrote: »

If I was vehemently anti HTB I'd be laughing these figures off as insignificant and asking the question why the government bothered with it in the first place.

Just one of an array of levers pulled in an attempt to keep the economy moving. One HTB transaction supports many other normal borrowers who otherwise wouldn't be able to make chains.

wotsthat

Thrugelmir wrote: »

Just one of an array of levers pulled in an attempt to keep the economy moving. One HTB transaction supports many other normal borrowers who otherwise wouldn't be able to make chains.

I'm sure that's the point of it. Still difficult to get excited about 7000 small loans in the grand scheme of things.