New research from Ocean Finance has found that the Government’s Help to Buy scheme is the most popular way for first-time buyers to get on to the housing ladder.
Half of first-time buyers said they would use the Help to Buy equity loan or mortgage guarantee schemes to overcome the barrier of having a small deposit, the figures show.
The Government started the Help to Buy scheme in 2013 in an attempt to kick-start the housing market following the financial crisis, which saw lenders tighten their mortgage lending rules and most 95% mortgages disappear. This meant borrowers needed to fund deposits of at least 10% and often, up to 25%, which took home-ownership out of the hands of many first-time buyers.
Almost 40% of first-time buyers questioned said being able to save a big enough deposit is the main barrier to owning their own home. This is following by rising house prices, which makes it harder to fulfil tough affordability checks and at the same time, pushes the amount needed for a deposit even higher.
Alongside its equity loan and mortgage guarantee schemes, the Government is set to launch a Help to Buy ISA this autumn. The ISA is designed to boost the savings of first-time buyers with a top-up from the Government of 25%, up to a maximum of £3,000 on savings of £12,000. Almost a quarter of those questioned by Ocean said they planned to open a Help to Buy ISA. That compares with 14% who expect to rely on help from their families to fund their deposit.
