The introduction of the Help to Buy scheme in the 2013’s Budget was meant to help stimulate the housing market and drive the construction industry. Critics say it will fuel the next housing bubble and that new housing projects would have happened anyway. It was, of course, also meant to help first time buyers onto the property ladder and families moving into bigger homes. The scheme has increased mortgage lending to its highest level since August 2008 but even Business Secretary Vince Cable admits it has also caused house price inflations.

It has now been announced that the Help to Buy Equity Loan initiative, which is the first part of this scheme, will run until the end of 2020. Via this scheme the government will provide a loan of up to 20% of the purchase price enabling applicants to apply for an ordinary 75% Mortgage by providing a minimum 5% deposit.

The Help to Buy Mortgage Guarantee option, which is the second part of the scheme, will run until the end of 2016 as originally intended. It could be argued that this option is merely a better extension of the NewBuy scheme which has been running since March 2012 and is due to finish in March 2015. Both these initiatives enable buyers to take out 95% mortgages with a 5% deposit. But indeed the first 95% mortgages have recently emerged on the open market again and will now give buyers an even bigger choice.

Freshly released statistics by the Office for National Statistics reveal an annual increase in house prices of 7.1% in England, 6.9% in Wales, 1.4% in Scotland and 2.7% in Northern Ireland from January 2013 to January 2014. This obviously is a concern to buyers, especially first time buyers, who in many cases have saved hard for a modest deposit which might now not be enough for the mortgages they require, even with the 95% mortgages on offer.

Some say the market is going from strength to strength but others people point out the obvious: there has been a chronic shortage of housing in the UK for a few years running now and where there is a shortage of supply, the prices will rise. The above mentioned extension of the Help to Buy Equity Loan initiative until the end of 2020 is the current political response to this shortage, as this scheme is only offered for purchases of new built houses.

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