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Hammond: Help to Buy scheme to close by end of year

The Help to Buy mortgage scheme has fulfilled its goals and will close to new loans by December this year, Philip Hammond has said.

The scheme was introduced by former chancellor George Osborne to increase the availability of high loan to value (LTV) mortgages and help first-time buyers get on the housing ladder.

In a letter to Mark Carney, governor of the Bank of England, Hammond, Osborne’s successor, said the scheme had achieved its goals by supporting over 86,000 households.

He said the scheme was introduced with a specific purpose that has now been successfully achieved, adding that there are now more LTV lenders in the market as consumer confidence had returned to the market.

Hammond agreed with the latest assessment from the Financial Policy Committee that the scheme had not “posed material risks to financial stability in the UK” or caused house prices to rise, and that ending the scheme would not end the provision of mortgages.

A 2014 report by the Public Accounts Committee found that the government had failed to demonstrate that Help to Buy offered value for money.

The chancellor stated that the end of the scheme “does not diminish in any way the government’s commitment to supporting those looking to get on the housing ladder”, pointing to the Help to Buy: ISA and Help to Buy: Equity Loan schemes.

The Resolution Foundation published a report today into the financial status of ‘just managing’ families, which found that they are twice as likely to rent as to own their home and spend 24% of their income on housing.

The LGA said recently that a ‘renaissance’ in council housebuilding is the only way to meet the growing demand, with up to 5.4 million people thought to be in need of affordable housing by 2024.

(Image c. Joe Giddens from PA Wire)

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