Half of brokers expect to see more lenders offering higher loan-to-values (LTVs) on new build properties by the end of the Help to Buy scheme in 2023, which enabled many first-time buyers to obtain more expensive new build properties than they could otherwise have afforded.
However, whilst in the second hand market lenders are offering higher LTV ratios, with the number of products available at 95% LTV more than doubling since Help to Buy began, this is not always the case with new build properties.
Mortgage Solutions’ latest poll asked brokers whether lenders should offer higher LTVs on new build properties to prepare for the end of the Help to Buy scheme in 2023.
Around 50 per cent of brokers agreed, whilst 41 per cent replied negatively.
About 9 per cent of brokers didn’t know.
Jonathan Clark, mortgage partner at Chadney Bulgin, said that the massive increase of new build properties being built and sold in the last few years has been almost entirely and artificially propped up by the government’s Help to Buy scheme.
He added: “If the scheme is fully withdrawn and lenders fail to fill the gap left with higher LTV products, it will have the same dire consequences as turning off a critically ill patient’s life-support.
“Like many of us, I do not believe that Help to Buy was the ideal long-term solution for the industry, but it has worked, and the mortgage industry needs to respond to its imminent demise.”
Also Mark Harris, chief executive of SPF Private Clients, said Help to Buy subdued the requirement for high LTV products on new-build properties.
He added: “On the assumption that Help to Buy is not reincarnated in some form or another, there will be need for lenders to step into this space.
“If they do not, the lifeblood of the new build market will be restricted to those with larger deposits or property investors.
“Finally, it will also help builders continue with confidence knowing that finance is available for applicants.”
Jonathan Harris, director of Anderson Harris, said that this will be an evolutionary process leading up to Help to Buy’s exit in 2023.
“Lenders naturally adapt and cater for gaps in the market.
“LTVs still remain generous for those with low deposits, provided they can meet the various affordability and stress-testing applied by lenders,” he concluded.