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| Help to Buy beats forecasts as house prices rise again | Help to Buy beats forecasts as house prices rise again |
| (4 days later) | |
| The chancellor's flagship Help to Buy scheme to boost the housing market has beaten forecasts in the two months since it was introduced, according to industry figures. | The chancellor's flagship Help to Buy scheme to boost the housing market has beaten forecasts in the two months since it was introduced, according to industry figures. |
| The Home Builders Federation (HBF) said 4,000 people had reserved a new home under the scheme, and that interest had been "huge" with more than 500 buyers taking advantage of it each week. | The Home Builders Federation (HBF) said 4,000 people had reserved a new home under the scheme, and that interest had been "huge" with more than 500 buyers taking advantage of it each week. |
| The figures come as mortgage lender Halifax reported a 0.4% rise in UK house prices in May and said the annual rate of growth was at its highest level in more than two-and-a-half years. | The figures come as mortgage lender Halifax reported a 0.4% rise in UK house prices in May and said the annual rate of growth was at its highest level in more than two-and-a-half years. |
| Aimed at boosting the construction industry, the first part of the Help to Buy scheme was launched on 1 April and offers aspiring homeowners an interest-free loan from the government to help them buy a new-build property. | Aimed at boosting the construction industry, the first part of the Help to Buy scheme was launched on 1 April and offers aspiring homeowners an interest-free loan from the government to help them buy a new-build property. |
| Borrowers need to raise a deposit of 5% of the value of the home, which can cost up to £600,000, and can borrow a further 20% from the government, with the biggest loan available at £120,000. The government-backed loan must be repaid when the property is sold. | Borrowers need to raise a deposit of 5% of the value of the home, which can cost up to £600,000, and can borrow a further 20% from the government, with the biggest loan available at £120,000. The government-backed loan must be repaid when the property is sold. |
| Stewart Baseley, executive chairman of the HBF, said: "The equity loan part of Help to Buy has got off to a flying start. Four thousand reservations in just two months shows both the consumer demand for the scheme, and developers' commitment to it." | Stewart Baseley, executive chairman of the HBF, said: "The equity loan part of Help to Buy has got off to a flying start. Four thousand reservations in just two months shows both the consumer demand for the scheme, and developers' commitment to it." |
| The latest set of data showing rising house prices is likely to fuel criticism of Help to Buy, which a number of experts have warned will drive up house prices to artificial levels. | The latest set of data showing rising house prices is likely to fuel criticism of Help to Buy, which a number of experts have warned will drive up house prices to artificial levels. |
| On Monday it was labelled one of the "most stupid economic ideas" of the past 30 years by leading City commentator Albert Edwards, who heads the global strategy team at Société Générale. | On Monday it was labelled one of the "most stupid economic ideas" of the past 30 years by leading City commentator Albert Edwards, who heads the global strategy team at Société Générale. |
| The data from Halifax, which is one of the lenders offering Help to Buy mortgages, suggests house price inflation is gathering pace, with three-month figures showing a 1.5% rise, up from 1.3%. | The data from Halifax, which is one of the lenders offering Help to Buy mortgages, suggests house price inflation is gathering pace, with three-month figures showing a 1.5% rise, up from 1.3%. |
| The bank said the average price of a UK home was now £166,898, up by 3.7% on May 2012's figure of £160,906. It's own annual growth figure, which is a comparison of quarterly averages, showed a 2.6% year-on-year rise – the biggest since September 2010. | The bank said the average price of a UK home was now £166,898, up by 3.7% on May 2012's figure of £160,906. It's own annual growth figure, which is a comparison of quarterly averages, showed a 2.6% year-on-year rise – the biggest since September 2010. |
| Martin Ellis, Halifax's housing economist, said activity in the housing market had picked up but remained low by historical standards. | Martin Ellis, Halifax's housing economist, said activity in the housing market had picked up but remained low by historical standards. |
| "Despite these recent signs of improvement in the housing market, the subdued economic background and the accompanying weak income growth continue to be a significant constraint on housing demand and activity," he added. | "Despite these recent signs of improvement in the housing market, the subdued economic background and the accompanying weak income growth continue to be a significant constraint on housing demand and activity," he added. |
| Separate figures from property group LSL showed a 15% increase in the number of first-time buyers taking on mortgages in April, as lenders became more comfortable about offering mortgages at high loan-to-values. | Separate figures from property group LSL showed a 15% increase in the number of first-time buyers taking on mortgages in April, as lenders became more comfortable about offering mortgages at high loan-to-values. |
| The firm, which bases its figures on data from mortgage lenders and its estate agency chains, said there were 22,000 first-time buyer transactions during the month, up almost 3,000 on March's figure. | The firm, which bases its figures on data from mortgage lenders and its estate agency chains, said there were 22,000 first-time buyer transactions during the month, up almost 3,000 on March's figure. |
| However, its director, David Newnes, warned that the boost to house prices provided by more activity could be problematic as it made homes less affordable to new buyers. | However, its director, David Newnes, warned that the boost to house prices provided by more activity could be problematic as it made homes less affordable to new buyers. |
| Figures from Halifax showing the price/earnings ratio of properties show that homes have been growing relatively more expensive over the past 12 months, with the average price now 4.59 times earnings versus 4.44 times in May 2012. | Figures from Halifax showing the price/earnings ratio of properties show that homes have been growing relatively more expensive over the past 12 months, with the average price now 4.59 times earnings versus 4.44 times in May 2012. |
| Newnes said: "Schemes like to Help to Buy are designed to launch a counter-offensive on deposit requirements. But the scheme may actually inflate property prices and turn out to be counter-productive." | Newnes said: "Schemes like to Help to Buy are designed to launch a counter-offensive on deposit requirements. But the scheme may actually inflate property prices and turn out to be counter-productive." |
| The second part of the Help to Buy scheme, when the government will guarantee mortgages, starts in January 2014. | The second part of the Help to Buy scheme, when the government will guarantee mortgages, starts in January 2014. |
| Top mortgages | Top mortgages |
| Chelsea Building Society | Chelsea Building Society |
| NatWest | |
| Yorkshire BS | Yorkshire BS |
| Provided by London & Country for the Guardian | Provided by London & Country for the Guardian |