Spicerhaart has reported a “frenzy of activity” since the second phase of Help to Buy was announced.
CEO Paul Smith said that branches are being overwhelmed with buyer enquiries.
He said: “haart has had the best first week of October for nine years. Last year we had 3,800 buyers registering in that first week, this year it was 7,281 – that’s a 92% increase.
“The interest is so great that we predict lenders will need to put a cap on the amount they lend under the scheme. Although this has not been highlighted by commentators yet, rationing will be essential to quell demand.
“What we need now is for this renewed confidence to tip the scales by encouraging owners to take advantage of the army of buyers out there by coming to market sooner rather than later. This is the only way to meet demand and keep prices from spiralling.”
Meanwhile, conveyancing company myhomemove predicted that the average age of a first-time buyer will fall by six years simply because of the scheme.
The firm said that the average age of the 3,700 first-time buyers whose cases it has handled since the start of the year is 33, buying a property worth an average of £180,000 with a deposit of £36,000.
Doug Crawford, CEO of myhomemove, said: “This is a vast amount of money which will take an average of eight years’ saving. With the second phase of Help to Buy launching, we predict that the average age of a first-time buyer will drop by up to six years to 27, as saving for a 5% deposit could take as little as two years.”
Crawford also said that the second phase of Help to Buy will be far simpler for both buyers and conveyancers, requiring little additional work – unlike the first phase of the scheme.
Under the first phase of the scheme, a shared equity mortgage available on new-builds only, borrowers will have to repay the 20% loan when they come to sell the property. The 20% will, however, be valued on what the property is worth at the point of re-sale, not 20% of the original loan.
For example, a new home is bought now under the first phase for £300,000 with a 5% deposit of £15,000, a 20% government shared equity loan of £60,000 and a 75% mortgage of £225,000. When the house is resold, if its value has increased to £500,000 the seller must repay the 20%, which has risen to £100,000.
In addition, after five years, the equity loan starts attracting monthly interest payments, first at 1.75%, going up from year seven by inflation (RPI) plus 1%.
With the new phase of Help to Buy, there is a mortgage indemnity put in place and there are no repayment complications other than the normal monthly mortgage amounts. So, a property, old or new, that is bought now for £300,000 with a 5% deposit, can be re-sold for £500,000 with the purchaser able to hang on to all the capital gains to plough into their next home.
Crawford said: “There is no reason a property bought with a Help to Buy indemnity mortgage should take any longer to complete on than a home bought with a standard mortgage.”
See also next story and today’s blog.
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Comments
Typical Spiceahartt nonsence! wo believes this stuff.....call trading standards
Lenders love the 2 or 3 year 'fixed interest' loan.
It is a slowly released trap - at the end of the period they have you by the short & curly - watch out!
How typical of the banks again, making excess profit,
5%+ rates plus cica £1000 fees, rip off, what ever happens to the bubble!
On that note, doesn't HTB make banks more likely to repo a property if they can pass on negative equity concerns of up to 20% back to the taxpayer?
Now is a great time to start banging on about a price crash. we are a tad below the trendline at the moment so prices will jolly upwards for a bit, but Mr osbourne has now set in place a relative of the price crash you and your chums were predicting 4 years ago.
Trevor Kent is bang on the money and anyone who even thinks he is wrong is either very young or very very naive.
Kevin,have you looked into this our did you just decide to bash the keyboard for something to say?
If the property value falls because employment rates have dropped to 7% and interest rates have risen 5 or six fold to say 3% and the over extended chain gap housing market continues to falter along at 65,000 transactions a month, who is responsible for the drop in the value of the 20% stake?. Is this normal negative equity or is this an enhanced negative equity scheme?
Media are now picking up on this comment re HTB that the Chancellor reportedly made to the cabinet:
"Hopefully we will get a little housing boom and everyone will be happy as property values go up."
http://www.newstatesman.com/politics/2013/10/osborne-reveals-true-aim-help-buy-inflate-house-prices
Well said PeeBee. I totally agree with Trevor. This is all so reminiscent of 1986 where the market was absolutely crazy and two years later the start of almost 10 years of utter misery. Things have changed considerably since then and people are much more savvy about the property market in general. Spicerhaaart of course is simply capitalising on the hype and trying to fan the flames.
Hmmm... three comments so far.
TK - I'm straddling the line - but leaning more to YOUR side on this at the minute!
Kevin - put some meat on your argument. Convince me and others that are reading this. So far you've said nothing other than try to pooh-pooh the opinion of one of the most respected professionals ever to tread our creaky boards.
Neither has your mate.
If you want Trevor to eat his words - put some sauce on them! ;o)
Agree with your post ,well said.
@Trevor Kent
What a load of nonsense.
"Agents' offices flooded" says the headline, well I still feel like baling out! The publicity has indeed produced buckets of hopeful but deposit-impoverished applicants, however many have been drip-fed only the good news and have no idea of the full cost and hidden problems with 'Help to Buy' mortgages. Just wait 3 months and watch the dam burst as offers fail when solicitors (hopefully) fully explain to their clients the long-term implications, down-valuations are rife and applicants' up-front costs flow unabated into non-performers' pockets! Big T