Buyers could not use Help to Buy if they required a main mortgage of more than 4.5 times their household income.
“The lender lent up to 4.5 times, and then the government provided the equity loan. It's very hard for that to be filled by lenders, given that scheme’s ended,” says Jordan.
Kate Davies, executive director of the Intermediary Mortgage Lenders Association, agrees that Help to Buy was probably not “everybody’s favourite”.
“But it did actually get spades in the ground. It did get stuff built,” she adds. “There's no central government replacement for that.
“If you've got an independent scheme that tries to replace Help to Buy – and the obvious one that comes to mind is Deposit Unlock -– it's got to appeal to all the lenders to have the same sort of traction as Help to Buy."
Davies adds: "It's got to be understood by them all. It's got to be as applicable in Penzance as it is in Northumberland.”
The mortgage guarantee scheme Deposit Unlock launched in 2021, enabling borrowers to purchase a new-build home with a 5 per cent deposit. Lenders that currently offer mortgages under the scheme are Accord Mortgages, Bluestone Mortgages, Nationwide and Perenna.
Mortgage guarantee scheme
Speaking about the idea of a government reintroducing a help-to-buy scheme, Davies adds: “If there is appetite for it, or it does look as if someone's going to do something, that makes it difficult for the people who have been working for ages on trying to think up an alternative, private-sector scheme.
"It's a bit of a catch-22.”
Besides suggesting improving the supply of new homes, a report for the Building Societies Association, published in April, recommends a review of the LTI flow limit to focus on first-time-buyer support.
The BSA’s report says that while the 15 per cent cap on lending above 4.5 times income may be less relevant today given higher mortgage rates, an immediate review should be undertaken to assess whether it would be beneficial to adjust the limit and to target mortgages above the cap at first-time buyers.
“At the moment, the binding constraint isn’t the LTI flow limit,” concurs Merritt at Yorkshire Building Society.
“I can’t speak for everyone; but for us, because we're having to apply the [Financial Conduct Authority's Mortgages and Home Finance: Conduct of Business Sourcebook] stress rule and effectively stress above the reversionary rate, customers are hitting their maximum affordability through the affordability model before they hit the LTI cap.
“When interest rates were lower, the LTI cap was a constraint and the affordability stress rate wasn't. So some of this is dependent on where you are in the economic cycle.
