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Lenders predict early end for Help to Buy

Almost half of mortgage lenders (46 per cent) think the mortgage guarantee part of the Government’s Help to Buy Scheme will be withdrawn ahead of schedule, a survey by the Intermediary Mortgage Lenders Association (IMLA) has found.

Lenders identified the greatest threats to the success of the scheme as:

  • artificially-inflated house prices (69 per cent)
  • unattractive mortgage product costs (39 per cent)
  • lack of lender support (39 per cent)
  • over-reliance on Government support (39 per cent).

Peter Williams, executive director at the IMLA, said:

“These findings throw the spotlight on crucial policy decisions that must be thought through to safeguard the recovery in mortgage lending and house building.

“Whether or not the scheme runs its full course is less important than making sure we have a self-sustaining market in place going forward. The evidence suggests that we have an entrenched mortgage market recovery which can survive its withdrawal.”

A separate study by the Royal Institution of Chartered Surveyors (RICS) revealed that in February 2014, buyers increased at their slowest rate since March 2013.

RICS attributed this slowdown to the initial surge in demand, which was driven by a more accessible housing market, levelling off.

Simon Rubinsohn, chief economist at RICS, said that the real issue affecting the housing market is the lack of new homes:

“Supply is simply not enough to satisfy demand. As a result, prices are likely to continue to move higher making it ever harder for people to take an initial step onto the property ladder.”