The second phase of Help to Buy has now officially launched – amid fresh warnings of an uncontrollable housing bubble from the Treasury Select Committee, and a suggestion from the mortgage industry that it is unnecessary.
House purchasers interested in a 95% mortgage under the scheme, which offers a taxpayer-backed indemnity on 15% of the loan, can apply now to some lenders.
RBS has launched two products, a five-year fix and a two-year fix, at 5.49% and 4.99% respectively. Both come without fees.
From Friday, Halifax will be offering Help to Buy mortgages, including a two-year fixed rate at 5.19% – and with a £995 product fee.
Other lenders that will be offering Help to Buy mortgages include HSBC, Aldermore and Virgin Money.
The Council of Mortgage Lenders dropped a strong hint that it did not feel the scheme is necessary.
It said that from the borrower’s perspective, there is “no practical difference” between a Help to Buy mortgage and other loans: “As for lenders, it will be left to their commercial judgment as to whether to participate in the scheme or not. Some may take the view that they already offer some mortgages at high LTVs without a guarantee and may not wish to increase lending at this level.”
The CML also warned of the possibility of unintended consequences.
Andrew Tyrie, chairman of the cross-party Treasury Select Committee, said ministers had failed to allay its concerns. He warned that with the “chequered history of government interventions in residential property, great care will need to be taken”.
Help to Buy has been labelled mad and “very dangerous” by the Institute of Directors.