A helping hand

05 Jan 2015

Last year might seem to have been one in which one three-word phrase – Mortgage Market Review – dominated our sector, but there was also another – Help to Buy – which also made a hugely significant impact and was perhaps even more widely debated than the regulatory changes.

Certainly, in political circles, Help to Buy was (at various points in the year) either a successful policy aiding first-time buyers in their aim to get on the housing ladder, or (in some quarters) responsible for rampant house price inflation in London and across the rest of the country. It appears that the former view of the scheme is in fact far more realistic than, what we might call, the Vince Cable view of Help to Buy as various scheme details and statistics have shown that there is no correlation between it and house price increases.

Indeed, this appears to be one of those rare government forays into the housing and mortgage market which has hit the right spot. Those benefiting from the Scheme are essentially the very people it was designed to help – namely first-time buyers with low deposits looking to become home-owners in a marketplace which is not exactly catering for them as it should. Add in the fact that HTB1 is also improving the supply of new homes – statistics suggest it is pretty much wholly responsible for the increase in new builds – and you can see why the government was quick to announce it would run until at least the end of the decade.

HTB2 – the mortgage guarantee element – has perhaps had a rockier road to travel over the course of the last 12 months. It has been criticised for allowing non-first-timers to use it, as well as the fact it is available for properties up to £600k. However, again the same fact remains, those with low levels of equity or deposit were not being particularly well catered for in the pre-HTB era, and there is (as always) a need to help second-steppers, for example, move up the ladder just as there is a need to get first-timers climbing in the same direction.

Again, the implementation of the scheme has shown that it is, in the great majority of cases, working in the right way. And coupled with those lenders who are participants in this part of the scheme, it has also provided a wider market catalyst for higher LTV lending, with those lenders outside the scheme having a far greater appetite to lend in this sector than pre-HTB. The average deposit level required to buy a first-home has moved down from the 25% mark to closer to 15% and this move has come about almost 100% because of the introduction of Help to Buy.

So, what of HTB in this new year and beyond? Well, as has already been mentioned, HTB1’s future appears assured – to such an extent that I can envisage it becoming a permanent part of the mortgage/property landscape. With the need to increase the supply of new homes in the UK being an absolute priority, and this scheme clearly helping in this area, it would take a very brave future government to pull it, especially with nothing to replace it with.

HTB2 is perhaps a more complex question. For a start, it is designed to finish at the end of 2016 which leaves us with less than two years to go. It too has clearly had a positive impact but the fact it is taxpayer’s money being used to guarantee these loans is a concern. Given there is a relatively healthy private mortgage insurance market – already widely used by the building society sector – there should be no reason why this type of support for high LTV lending cannot continue but within the private sector.

The capacity appears to be in place and mortgage insurers, such as Genworth, have been banging the drum for some time regarding the announcement of a structured exit plan for HTB2 sooner rather than later. Certainly housebuilders will want to know that high LTV mortgage lending is going to be available to purchase their new developments otherwise the likelihood is they will pare back on their building and, quite frankly, this would be no good for anyone.

Therefore, especially in an election year, I fully anticipate Help to Buy to continue to play a major role in this (and any future) government’s housing market activity. We have had so many schemes brought in and jettisoned over the years that to have finally found one which ‘does exactly what it says on the tin’ and delivers is something we should cherish and continue to support. Let’s hope that politicians of all political hues agree on this, post 7th May.

Bob Hunt

Blog Archive

Opinion: The mortgage revolution is unfolding 
10 Dec 2018

Brokers’ fortitude will see them through this ‘depressing and dispiriting’ situation 
10 Dec 2018

Paradigm CEO Hunt invests in mortgage switching platform Dashly 
19 Nov 2018

We should be confident despite the uncertainties 
14 Nov 2018

FCA should leave mortgage market alone until Brexit uncertainty lifts 
09 Nov 2018

Not following EU rules could benefit the market 
16 Oct 2018

Long-term fixes fail to catch on 
01 Oct 2018

Mortgage market must ensure it deals in Project Clarity 
21 Sep 2018

Advisers can help landlords get their skates on for HMO changes 
11 Sep 2018

A deeper look at the state of the UK lending market 
17 Aug 2018

Understanding product transfers 
30 Jul 2018

‘Go compare’ is not so ‘simples’ 
26 Jul 2018

It’s worth looking into later life lending 
05 Jun 2018

SVRs are a cash cow for many mortgage lenders 
04 Jun 2018

Leaving a network should be more straightforward 
08 May 2018

Not all later life customers are in the same boat 
03 May 2018

Advisers must beware leasehold ‘minefield’ 
16 Apr 2018

It’s just not cricket 
12 Apr 2018

Proc fee timescales are way off 
29 Mar 2018

Broker-lender relations have undergone a fundamental shift 
28 Mar 2018

Opening at weekends shouldn’t be a priority 
13 Mar 2018

Take control to signpost clients in your direction 
22 Feb 2018

Product transfer: ‘Lenders might view greater adviser involvement as a problem’ 
12 Feb 2018

Buy-to-let advice is needed more than ever 
08 Feb 2018

Open Banking is a revolution without the fanfare 
16 Jan 2018

Land Registry needs to engage with brokers over Instant Mortgage 
08 Jan 2018

Simply focusing on age will not fix borrowing into retirement 
22 Dec 2015

Reduce the regulatory burden for firms by reallocating money from FCA fines 
03 Nov 2015

Customer choice has narrowed – the FCA could help fix this 
02 Nov 2015

The regulator’s differing interpretations of rules 
21 Oct 2015

Change is constant 
08 Oct 2015

Paradigm signs exclusive specialist lending deal with Brightstar 
06 Oct 2015

Landlords cash in on PRS 
22 Sep 2015

MCD – no grace but plenty of favours 
16 Sep 2015

Equity release success signals change in consumer perspective 
05 Aug 2015

Remortgagers play at ‘chicken or egg’ 
29 Jul 2015

BTL has closed the housing gap 
20 Jul 2015

Analysis: Writing a will can avoid a death blow 
15 Jul 2015

Industry deserves housing minister appointed to Cabinet 
22 Jun 2015

Waiving Stamp Duty won't encourage downsizing 
08 Jun 2015

Damned if they do, damned if they don’t 
01 Jun 2015

In the Spotlight with Bob Hunt 
26 May 2015

Election result provides stability 
20 May 2015

‘Grey borrower’ power is set to grow 
13 May 2015

Decisive election result could spur new build revolution 
27 Apr 2015

MMR 12 months on 
13 Apr 2015

Mind the protection gap 
09 Apr 2015

Analysis: Change status with the right support 
08 Apr 2015

Housing will be election battleground 
16 Mar 2015

Securing the specialist string to your bow 
04 Mar 2015

Interest rate direction is anyone’s guess 
04 Mar 2015

Regulatory B2L change is inevitable 
12 Feb 2015

Analysis: Do your homework with relationships 
04 Feb 2015

Lenders rising to the self-employed challenge 
04 Feb 2015

The sectors to watch in 2015 
06 Jan 2015

A helping hand 
05 Jan 2015

Can a landlord be truly ‘accidental’? 
17 Dec 2014

Coming in from the cold 
05 Dec 2014

Analysis: Why distribution demands inclusion 
12 Nov 2014

HSBC’s move signals cost of branch advice still rising 
20 Oct 2014

Analysis: Broker community boosted by HSBC 
15 Oct 2014

Just when I thought I was out 
08 Sep 2014

Analysis: Owning a home is not out of reach 
03 Sep 2014

Take level 4 advice exams before the FCA steps in 
02 Sep 2014

Analysis: Get set for more BoE intervention 
20 Aug 2014

Welcome to the Twilight Zone 
11 Aug 2014

Housing policy deserves seat at top table – Bob Hunt 
24 Jul 2014

MMR is enough to slow the bubble 
09 Jul 2014

Help to Buy remains in the spotlight 
08 Jul 2014

Mixed messages risk consumer confusion - Bob Hunt 
03 Jul 2014

It’s good to talk 
20 Jun 2014

H2B a rare housing policy success 
18 Jun 2014

Increasing mortgage volume will come through brokers - Bob Hunt 
27 May 2014

The better option to going direct 
14 May 2014

FCA concerned by packaging renaissance 
12 May 2014

Watch out for European regulation by year-end 
06 May 2014

Ask the Experts: Will MMR cause mass application declines? 
22 Apr 2014

Ask the Experts: Can a broker operate MMR-compliantly before 26 April? 
17 Apr 2014

Cross-sales not just for times of crisis 
16 Apr 2014

Brokers in the dock 
26 Mar 2014

Lenders in catch 22 situation over MMR - Bob Hunt 
25 Mar 2014

Paradigm launches protection arm 
21 Mar 2014

‘MMR Day’ may be a damp squib 
12 Mar 2014

Make sure your papers are in order 
12 Mar 2014

MMR lending slowdown could force protection bonanza 
18 Feb 2014

Countdown to MMR 
12 Feb 2014

A big year ahead for lenders 
04 Feb 2014

If the quality is same – why can’t AR & DA proc fees be equalised? 
30 Jan 2014

BoE is unlikely to be trigger-happy 
15 Jan 2014

We’re not in 2008 anymore 
09 Jan 2014

FCA cannot ignore views of smaller firms 
13 Dec 2013

The Prediction Game 
06 Dec 2013

Stay ahead of the regulator with CPD 
27 Nov 2013

Don’t let booming business hamper MMR preparation 
21 Nov 2013

Living up to expectations 
15 Nov 2013

MMR compliance underpins success 
30 Oct 2013

Advisers should step up to level 4 qualifications 
24 Oct 2013

Bank of England must follow words with actions 
02 Oct 2013

Lean times leave a leaner, keener core 
04 Sep 2013

If you don't ask lenders, you don't get 
22 Aug 2013

Steady as she goes is the right approach 
20 Aug 2013

Are we about to see a broker boom? 
16 Jul 2013

Now is not the time for procrastination 
10 Jul 2013

Improving standards is no grounds for complaint 
03 Jul 2013

Is product innovation being tied in knots? 
24 Jun 2013

We can’t rely on external stimulus 
06 Jun 2013

Put your services in the shop window 
06 Jun 2013

Mutual Magic 
30 May 2013

Does the FCA understand human frailty? 
07 May 2013

Has the mortgage market regained its mojo? 
17 Apr 2013

Help to Buy plus prudence equals prosperity 
05 Apr 2013

Will George Osborne be having a flutter ahead of the Budget? 
14 Mar 2013

Size matters on capital adequacy 
04 Mar 2013

Mortgage Indemnity Guarantees: helping first-time buyers fly 
19 Feb 2013

HS2? I’d rather see more houses built instead 
06 Feb 2013

95% LTV mortgages are not back... yet 
22 Jan 2013

Regulators have listened to feedback 
21 Jan 2013

The Great House Price Debate 
07 Jan 2013

Keeping your clients' wills up to date 
02 Jan 2013