First time buyers need to act soon as the end of the Help to Buy Mortgage Guarantee Scheme edges closer

5th January 2016


Potential first time buyers need move quickly as December 2016 will see the mortgage market will wave goodbye to the Help to Buy Mortgage Guarantee Scheme.

The government-backed scheme which helps would-be homeowners get on the property ladder with a deposit as low as 5%,  has had a huge impact effect on the 95% loan-to-value (LTV) mortgage market since its introduction on 8 October, 2013.

In fact according to the number of mortgages at 95% LTV has risen from a mere 56 in October 2013 to a massive 249 today, marking a 444% increase.

In addition, the cost of a mortgage at this LTV is now significantly cheaper; for example, the average two-year fixed rate mortgage has fallen by a substantial 1.41% since the launch of the scheme.

Oct-13 Jan-15 Today
Number of 95% LTV mortgage deals 56 182 249
Average two-year fixed rate at 95% LTV 5.74% 5.19% 4.33%
Average five-year fixed rate at 95% LTV 5.20% 5.35% 4.81%
Source: Compiled: 5.1.16

Charlotte Nelson, Finance Expert at, said: “The Help to Buy Scheme was launched to kick-start the housing market and help first-time buyers get onto the property ladder.

“It has therefore been a key driver in normalising the high-LTV market, making it socially acceptable to lend to borrowers with a 5% deposit once again.

“With first-time buyers often considered the lifeblood of a healthy mortgage market, it’s great that there has been a significant boost in choice in this vital area.”

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However Nelson highlighted that providers within the Help to Buy Scheme are not the only ones to have boosted the market, as others have also begun to compete for first-time buyers’ custom.

“Those looking for a 95% LTV mortgage should therefore aim to look at the whole market, as more cost-effective deals can often be found outside the scheme,” added Nelson.

“Borrowers will need to move quickly, however. With the scheme due to end this year, first-time buyers who have not yet started the process of buying a home could find that their options narrow significantly when the scheme ends in December, so to make the most of the choice available, borrowers should look to take the plunge before it becomes too late.”

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