Lenders will have to "ration" the amount they lend under Help to Buy to quell frenzied demand among buyers, the UK's largest independent estate agent has warned.
Haart has seen the number of buyer registrations nearly double in they first week of October, thanks to the publicity surrounding Help to Buy.
Chief executive Paul Smith said buyers who would once have turned to the Bank of Mum and Dad to fund their property purchase now have somewhere else to turn. “The ‘Bank of Help to Buy’ now reigns supreme in the minds of those struggling to step onto the property ladder.
"This has stimulated a frenzy of activity, when things are usually calming down in the run up to Christmas, with our branches being overwhelmed with buyer enquiries."
Haart has had the best first week of October for nine years, Smith said. "Last year we had 3,800 buyers registering in that first week, this year it was 7,281, that’s a 92% increase.
“The interest is so great that we predict lenders will need to put a cap on the amount they lend under the scheme. Although this has not been highlighted by commentators yet, rationing will be essential to quell demand.
“What we need now is for this renewed confidence to tip the scales by encouraging owners to take advantage of the army of buyers out there by coming to market sooner rather than later.
"This is the only way to meet demand and keep prices from spiralling.”
Barney McCarthy, from Which? Mortgage Advisers, has warned that many potential buyers may be disappointed in their quest for a mortgage under Help to Buy. “Borrowers also need to be mindful that while there may be more mortgages available with a smaller deposit, lenders will still apply tough criteria requiring them to prove their suitability for the mortgage."
Help to Buy 2 has been criticised for the lack of mortgage choice at launch, leaving brokers with just one mortgage to choose from.
Numbers are edging upwards, however, with Santander announcing that it would offer Help to Buy loans, although it is still working on the details.
Of the major lenders, only Barclays and Nationwide have yet to announce their policy. This means lenders accounting for roughly 40% of the mortgage market have now climbed on board.
OneSavings Bank, which runs Kent Reliance, has also announced its will launch Help to Buy mortgage guarantee scheme products next year following the completion of its first securitisation.
Comments