Government calls time on Help to Buy mortgage scheme
Philip Hammond has confirmed the Government is closing its Help to Buy mortgage guarantee scheme in the latest of George Osborne's flagship policies to be abandoned by the new administration.
In a letter to Bank of England Governor Mark Carney, the Chancellor said the scheme was "introduced with a specific purpose that has now been successfully achieved" and it will close at the end of the year.
The Government stressed the scheme was always due to finish at the end of 2016.
Launched in the autumn of 2013, it was described by the then government as a "landmark" scheme that would get thousands of Britons on the housing ladder.
It meant that buyers only needed to find a deposit of 5% of the value of their home, with a mortgage covering the remaining 95%.
New figures reveal that more than 86,000 households have been supported by the scheme.
But the Government said it is no longer needed as confidence has returned to the market, with more private lenders offering 90% to 95% mortgages.
Across all of the Government's Help to Buy schemes a total of 185,000 homes were bought, including over 150,000 properties for first time buyers.
In his letter, Mr Hammond said the Bank of England's Financial Policy Committee has assessed that the move to drop the scheme is "unlikely, in current market conditions, to affect significantly the provision of finance" to Britons hunting for a mortgage.
He added: "It is important to note that the end of this particular scheme does not diminish in any way the Government's commitment to supporting those looking to get on the housing ladder."
Ministers stressed there continue to be schemes to help Britons get on the housing ladder, including Help to Buy Isas and shared ownership.
Housing and planning minister Gavin Barwell said: "Today's figures show that Help to Buy is helping more people realise their home ownership dream by reducing the need for large deposits and getting more new homes built.
"With hundreds of households helped every day through our range of Government-backed schemes, we are building a country that works for everyone and not just the privileged few.
Paul Smee, director general of the Council of Mortgage Lenders, said: "Help to Buy continues to give a welcome leg-up to many creditworthy buyers who may not otherwise have been able to get a foothold on the property ladder.
"The scheme has helped buyers right across the country, including a high proportion of younger borrowers and first-time buyers.
"Mortgages for those with small deposits are now becoming more common outside the scheme and Help to Buy has been a significant help for buyers when they were less readily available."
Sam Dumitriu, head of projects at the Adam Smith Institute, said Mr Hammond is "right to dump George Osborne's misguided mortgage guarantee scheme".
He added: "Britain's housing crisis is the result of supply being unable to meet rising demand.
"Help to Buy only served to make this problem worse, pushing up prices through cheap credit, while doing nothing to address the underlying housing shortage.
"There is a better way. Liberalise our antiquated planning laws to allow new building in the areas that people actually want to live."