The business editor of the BBC has recently reported that the governor of the Bank of England is calling for the maximum size of loan that qualifies for a government-backed Help to Buy mortgage to be reduced from £600,000 to as little as £350,000.
This move is in reaction to concerns that low interest rates coupled with Help to Buy schemes are increasing the likelihood of a housing bubble, as house prices across Britain increased by 8.4pc on average. However, this figure differs drastically from region to region as London reported a rise by 9.1% whereas prices in the north actually fell by 0.5%.
Clearly, the issue of a housing bubble is unlikely to affect the north, where Help to Buy is most actively used. That said, this is not a case of the north being punished for southern (or rather, London) housing concerns, as the average value of Help to Buy loans is just under £150,000 – over £200,000 less than the proposed new maximum.
These equity loans, which are currently open to both first-time buyers and those looking to move, require the buyer to contribute a minimum of 5% of the overall price of the property, with the government providing a loan for up to 20% and a mortgage covering the remaining 75%.
Theoretically, then, should a maximum loan reduction come in to place, buyers in the north who are interested in using the Help to Buy scheme will be largely unaffected.
If you would like to talk to someone about the Help to Buy scheme, speak to your Help to Buy agent, or contact Mike Carter at mike.carter@paulcrowley.co.uk or call 0151 264 7363 for any legal advice.