16% rise in first time buyer loans attributed to Help to Buy 2

Analysis of industry and government data shows the Help to Buy mortgage guarantee (HTB2) accounted for less than 4% of first time buyer activity in its first six months, allaying fears of its inflationary impact.

But the latest Genworth / Moneyfacts Mortgage LTV Tracker also reveals it played an important role in encouraging first time buyers back to the market: delivering 16% of the year-on-year rise in first time buyer loans and helping to protect high loan to value (LTV) products from falling numbers and rising interest rates.

The 5,843 HTB2 loans to first time buyers made up just 3.9% of the total 148,200 first time buyer loans between October 2013 and March 2014 (source: CML).  The 342 HTB2 loans to first time buyers in London also represented just 1.4% of the 25,300 total to first time buyers in the capital during this period.

Yet first time buyer numbers during the first six months of HTB2 were 35,700 higher than the equivalent period a year earlier (112,500 in October 2012 to March 2013) as the mortgage market continued its recovery.

Those using HTB2 represent 16% of this 35,700 rise: meaning that one in six of these extra first time buyers was able to buy with a 5-15% deposit via HTB2 despite average deposits for the whole market remaining high in historic terms.