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Published: Fri, September 30, 2016
Economy | By Melissa Porter

Mortgage guarantee has helped 86000 people onto housing ladder

Mortgage guarantee has helped 86000 people onto housing ladder

Ministers confirmed the government would continue to offer Help to Buy equity loans for new build home purchases and the ISA scheme to boost savings for a deposit. This reflects the fact hat the scheme was introduced with a specific objective that has now been successfully achieved and, as such, I can confirm that it will close to new loans at he end of 2016 as planned.

It was meant to reduce mortgage costs for people buying homes at a high loan-to-value ratio as house prices rose well ahead of incomes, fuelled by a protracted housing shortage.

The scheme, which was aimed at making access to finance easier for young, first-time buyers, was one of the flagship policies of David Cameron's government.

This reflects the fact that the scheme was introduced with a specific goal that has now been successfully achieved and, as such, I can confirm that it will close to new loans at he end of 2016 as planned.

The financial policy committee found that the scheme "has not been a material driver of house price growth", Hammond said, despite reports this week that help to buy as a whole had pushed up house prices by an average of £8,250, according to research from housing charity Shelter.

Ministers stressed there are still schemes to help Britons looking to buy their first home, including Help to Buy ISAs and shared ownership.

"With hundreds of households helped every day through our range of Government-backed schemes, we are building a country that works for everyone and not just the privileged few".

Hammond underlined the government's continued commitment to the overall Help to Buy programme and other policies created to boost the housing market. With this in mind, the withdrawal of Help to Buy may not have a dramatic an impact on the market.

A fluid housing market is key to the overall health of the economy, and supporting first time buyers onto the property ladder is critical to achieving that.

'Mortgages for those with small deposits are now becoming more common outside the scheme and Help to Buy has been a significant help for buyers when they were less readily available'.

"Moreover, the high LTV mortgage market has become less reliant on the scheme as confidence has returned", the chancellor wrote.

'Help to Buy only served to make this problem worse, pushing up prices through cheap credit, while doing nothing to address the underlying housing shortage. Liberalise our antiquated planning laws to allow new building in the areas that people actually want to live'.

It provides a government guarantee to lenders on mortgages where a borrower has a deposit of between 5% and 20% for existing properties as well as a new-build.

Buyers are still fully responsible for mortgage repayments.

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