Low and modest earning families will struggle to cope with their Help to Buy mortgage payments, according to new research from Resolution Foundation.
Monthly repayments would be too expensive across two-thirds of Britain, based on a couple with one child owning a two-bedroom house with a net income of £22,000. The effect was strongest in Cambridge, where such a couple would have to spend 85 per cent (£1,557 a month) on mortgage repayments.
In Hounslow the figure is 76 per cent (£1,395), in Exeter it’s 53 per cent (£970 per month) and in Aberdeen it’s 50 per cent of net income (£918 per month).
Vidhya Alakeson, deputy chief executive, said: “The aspiration to own a home remains strong among millions of families but the growing gap between renting and traditional home ownership is too great for many.”
Resolution Foundation suggests that instead of David Cameron’s 95 per cent government-guaranteed mortgages, shared ownership of properties is a better solution for those on low and modest incomes. Assuming the couple earning £22,000 spend no more than 35 per cent of their net income on housing, shared ownership would be financially viable in 87 per cent of local authorities.