Lending to first-time buyers has improved this year, but the Help to Buy scheme is still not solving the woes of the housing market, says the Bank of England Governor.
Figures from the Council of Mortgage Lenders (CML) show that lending to first-time buyers has increased significantly in the third quarter, especially in London.
The number of loans advanced to new buyers in the capital between July and September increased by almost a third (32%) on the same period in 2012.
The CML’s director-general, Paul Smee, said that first-time buyers had been “the key driver in the first half of the year in London”.
But the value of loans went up by more than 40% on last year’s Q3 total, as new buyers found themselves needing to borrow more.
First-time buyers borrowed an average of £198,000 across the quarter – a sizeable increase of 2.75% on the average of £192,700 advanced during the previous quarter.
And with a similar pattern expected following the early launch of the Help to Buy scheme in October, the Bank of England Governor Mark Carney said that the new scheme was highlighting the key problem of supply.
The scheme has been designed to improve the availability and affordability of high loan-to-value mortgages, allowing first-time buyers a greater opportunity to join the housing ladder.
But without a boost to the supply of new housing, the market will drive prices back out of the reach of aspiring young buyers.
Speaking to the Treasury Select Committee yesterday, Dr Carney told MPs that there was no evidence of a credible strategy to increase the number of new homes.
His testimony turned the tables on accusations from Labour MP John Mann that he had become too close to the Chancellor, which Dr Carney said had left him feeling 'more than mildly offended’.
You can find out more about Help to Buy here and view all the mortgage deals available through the scheme here.
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