A mortgage insurance company has spoken out about the inefficiency of the Help to Buy 2 scheme, and says that it could be used to help thousands more.
Genworth, an insurance company, have crunched the numbers and found that the scheme is not being used to the full potential.
Apparently, George Osborne pledged that his pet scheme would enable up to £130 billion of lending to help first time buyers buy a home, across three years. This is equal to 43.3 billion per year.
During 2014, however, Genworth’s research found that the scheme had supported £5.7 billion worth of loan, just 13 per cent of what Mr Osborne claimed was its capacity.
This left £37.5 billion left over last year.
This could theoretically equate to 255,000 house purchases, based on the average property value sold through the Help to Buy Mortgage Guarantee scheme, which is £147,378, the insurer claimed.
Help to Buy, as a whole has not helped to lower housing prices. It has, however, managed to put many thousands of individual cases of first time buyers on the property ladder. But it hasn’t fixed the market as it was hoped to do.
With an extra 225,000 homes being potentially sold with the scheme aiding the sale, arguably house prices may have been affected more in total. On the other hand, however, the reason house prices are so high is partly because there are not enough being built, and Help to Buy may only be exacerbating this issue.
Simon Crone, Genworth vice president for mortgage insurance in Europe, said: “At a time when hopeful first-time buyers face multiple challenges to reach their goal of home-ownership, it seems unacceptable that Help to Buy is not maximising its capabilities to help more achieve this aim.
“Given low rates of house building, it is perhaps a blessing that the market has not been flooded by an extra 200,000 first-time buyers overnight. But if careful steps are taken and it is paired with greater house building to guard against house price inflation, our analysis shows that Help to Buy could help restore the first-time buyer market to its former glory.”