Belfast Telegraph

Help to Buy 'boosting confidence'

One third of people who plan to buy a home in the coming months are hoping to get a helping hand from the Government's flagship Help to Buy scheme, a study has found.

The research by Santander suggested that Help to Buy, which is set to inject further life into the housing market next week, has become a "major cause of increased confidence" as Britons become more optimistic about purchasing a property.

Some 10% of people surveyed, which would equate to 5.1 million people across the UK, believe they are likely to buy a home in the next year, up from 8% when similar research was carried out in January 2012.

One third (33%) of these people, which could equal around 1.7 million consumers across the country, said they would be turning to the Help to Buy scheme for help.

Younger people were the most likely to be intending to buy, with 18% of 18 to 34-year-olds saying they plan to purchase a home in the next 12 months.

Londoners were found to be the most confident about their chances of buying a home in the next 12 months, with one fifth (20%) saying they are likely to do so. At the other end of the scale, just one in 50 people (2%) surveyed in Wales intend to purchase a property in the next year.

Some 9% of people in Scotland intend to buy in the next year, while in Northern Ireland, where property prices are only just starting to see signs of turning around following the financial crisis, this figure was 5%.

Mortgage availability has sharply increased over the last year following government schemes such as Funding for Lending and the first phase of Help to Buy, which is an equity loan scheme designed to give people buying a new-build property a helping hand.

But concerns have been raised that the second phase of Help to Buy will encourage borrowers to over-stretch themselves and could lead to a housing bubble as the rise in demand increases at a faster rate than the supply of properties coming to market. The scheme will offer state-backed mortgages to people with deposits as low as 5% who want to buy a new-build or an existing property.

House prices in London are already around 10% higher than they were a year ago, although in many other areas of the UK they are still way off their pre-financial crisis peaks.

Experts have also warned that many aspiring home-owners who are pinning their hopes on Help to Buy will be left disappointed as they will still need to undergo tough checks by lenders.

The second phase of Help to Buy was due to be launched in January, but the Government has brought this forward by three months and has said that people will be able to start applying for the mortgage guarantee from next week.

The initiative, which is set to run until January 2017, will see the state offer guarantees totalling around £12 billion to unlock £130 billion of high loan-to-value mortgage lending.

Several major mortgage lenders have yet to decide whether they will take part in the new phase of the scheme and are mulling over the costs and benefits.

State-backed lenders Royal Bank of Scotland (RBS) and Lloyds Banking Group, which together account for about one third of the mortgage market, have already confirmed they will take part although have yet to announce details of their products or exact launch dates. Another lender, Aldermore, which accounted for 0.3% of the mortgage market in 2012, has said it plans to come on board in January.

Santander, which is involved in the first part of Help to Buy is also yet to confirm whether it will take part in the new phase. It carried out the survey of more than 2,000 people in August, before the Government announced that Help to Buy was being brought forward.