View more on these topics

Brokers back Help to Buy MIG despite ‘flop’ claims

CPD-Centre-Sign-Up-Border-480.jpg

Brokers have backed the Government’s upcoming £130bn Help to Buy guarantee scheme despite economists predicting the initiative will be a “flop”.

Under the first part of Help to Buy, applicable to new homes worth up to £600,000, buyers put down a 5 per cent deposit and receive a 20 per cent Government equity loan, which is interest-free for five years.

The second element of Help to Buy, set to launch in January, is a £130bn mortgage indemnity scheme for new and existing homes where the Government guarantees up to 15 per cent of the purchase price, with the borrower putting down a deposit of between 5-15 per cent.

The price of the guarantee and the extent of capital relief has yet to be announced.

Capital Economics property economist Matthew Pointon believes the MIG scheme will be “a bit of a flop” as it not such a good deal for buyers without the 20 per cent equity loan.

He says: “We might see an increased availability at higher LTVs but they are still going to be pretty pricey – that is if lenders offer them at all.”

But Lentune Mortgage Consultancy director Stuart Gregory says: “I think the MIG scheme will be a success. A lot of people do not want the 20 per cent equity loan tied up in the house, and are willing to pay a little more for full ownership from day one.”

London & Country operations and compliance director Pat Bunton says: “Shared equity schemes are not the right solution for everyone so the MIG scheme is a good and useful initiative that should help the marketplace.”

A spokeswoman for Lloyds Banking Group, the only lender to commit to the MIG scheme so far, says: “With the target markets very different, it is unlikely we will see a great volume move of potential buyers from one part of Help to Buy to the other.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com