The uptake of Help to Buy equity loans and the supply of affordable housing

21 November 2013

Peter Williams, Executive Director of the Intermediary Mortgage Lenders Association (IMLA), comments

“With more than treble the number of Help to Buy equity loans agreed in the third quarter compared with the second [1,175 to 4,200], there is no doubting the public appetite for new homes. The value of lending on new properties has shot up accordingly [from £42.9m to £165.1m], although it is sobering to see that alongside the good news on Help to Buy, the government recorded a 26% fall in the supply of affordable housing in the year before the scheme launched.

“The balance of housing supply and mortgage lending needs carefully managing: lenders are keen to see new build numbers increase to protect against excessive price inflation while developers rely on access to mortgages for empty properties to become occupied homes. What’s needed is long term equilibrium, and with more than 900 developers on board with Help to Buy and growing competition among lenders, the signs are that the equity loans are providing welcome impetus to improve supply from both sides.

“Few in the construction industry would have dared put £3.5 billion of funding for equity loans on their last Christmas wish list, not to mention £10 billion for mortgage guarantees which also apply to new build properties. With these elements now in place, the market has a healthy momentum which will help government and the wider industry to improve supply figures for 2013/14 and plan for the future from a position of greater strength.”

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