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Help to Buy 2 drives high-LTV lending

The Help to Buy mortgage guarantee scheme has boosted both first-time buyer lending and higher-LTV mortgages, new figures show.

The number of 95% LTV mortgages almost doubled as a proportion of overall activity in the first 18 months of Help to Buy 2.

They accounted for £3.43 of every £100 of mortgage, up from £1.77 in the previous 18 months.


First-time buyer lending grew by almost a third during the same period, according to analysis of Bank of England data by Genworth, the private mortgage insurer.

However, the figures also show that first time buyer and 95% LTV lending activity fell year-on-year in Q2 for the second quarter running.

This is the first time this has happened since 2010/11

During the first 18 months of Help to Buy 2, £12.24 of every extra £100 loaned was via 95% LTV mortgages.

This has helped deliver a significant boost to overall lending, without compromising underwriting standards or inflating house prices according to the Financial Policy Committee (FPC).

But there are signs that 95% LTV lending stimulated by Help to Buy 2 may already be on the wane.

Both 95% LTV lending and first time buyer lending declined by value year-on-year across the first half of 2015.

Simon Crone, vice president for mortgage insurance – Europe at Genworth, said:

“There is no denying that Help to Buy 2 has played an important part in revitalising the first-time buyer and high-LTV mortgage market following a significant lending drought.

“Some participating lenders are now moving towards launching non-Help to Buy products, but it remains to be seen whether this will be enough to sustain the benefits of the scheme once it expires. 

“We are potentially facing a situation where the high LTV market could easily fall back into decline with the end of HTB2 now just over a year away.”


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