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Help to Buy May End Early

Written By On 11/03/2014

Views are being expressed by a large amount of mortgage lenders that the government may have to cut back on their Help to Buy scheme earlier than they had originally planned.

This consensus of opinion has developed because of the unsettling worries of a housing price bubble that many feel has materialised by a large rise in first time buyers. There is a widespread opinion that demand is now outstripping supply and that can only act as a catalyst in driving up the cost of properties.

The report was accumulated from research conducted by the Intermediary Mortgage Lenders Association, who are an organisation that comprises of building societies and banks. The industry association, often referred to as the IMLA, use brokers to provide their mortgages to customers.

Nearly fifty per cent of the lenders and brokers that were surveyed believe that the Help to Buy scheme will be terminated early. A larger proportion of them felt it could possibly stop even more prematurely for remortgages.

The scheme was developed to help encourage lenders to offer loans to people who only had a small deposit of five per cent. The government guaranteed the lender their money if any issues might arise with the borrower.

Chancellor George Osborne will be addressing the country with his budget next Wednesday and there are expectations that he might be under pressure to make a few changes within the scheme, especially after the recent reports and data for property price increases.

Peter Williams, the association’s executive director commented:

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.