Average Help to Buy equity loan mortgage falls to £140k

The average purchase price is more than £400k below the £600k limit as the scheme continues to attract younger buyers.

The average value of a Help to Buy equity loan (HTB1) mortgage fell to £140,138 in July: 2% less than in June and 15% lower than the market average (£165,044) according to new data from Mortgage Advice Bureau, the UK’s leading independent mortgage broker.

This is also 7% lower than the £150,000 limit Lloyds Banking Group recently imposed on its HTB1 mortgage lending, suggesting the move will not restrict many consumers hoping to access the scheme should other lenders follow suit.

July is the second successive month to have seen the size of the average HTB1 mortgage fall by 2%, having climbed to £146,472 in May.

Average HTB1 loans are falling because consumers are using the scheme to purchase increasingly affordable properties. The typical value of a HTB1 property fell to £194,547 in July: a decrease for the second successive month and 2.3% less than the average for June (£199,026). This is also £405,453 less than the £600,000 maximum price for Help to Buy equity loan properties.

The data from Mortgage Advice Bureau – compiled from over 550 brokers and 900 estate agents – also suggests the Help to Buy equity loan scheme is continuing to attract its target audience of younger buyers. The average age of a HTB1 applicant in July was 32.2, down from 32.6 in June and 4.1 years younger than the whole-of market average for homebuyers (36.3). 

Andy Frankish, New Homes Director at Mortgage Advice Bureau, comments:

“When news of Lloyd’s temporary cap on Help to Buy lending broke, many cynics proclaimed this was the death knell for the government scheme. However, our data shows that the average HTB1 customer is already borrowing £10,000 less than this limit, so should other lenders follow suit, this would actually have little impact on most borrowers.

Of course, it’s a different story in areas such as London where house prices are much higher, but larger Help to Buy equity loans are still available from alternative lenders. The scheme has been a great success in reaching younger buyers looking to buy affordable properties (far below the £600,000 limit) and is giving first-time buyers with smaller deposits a much needed step up on the property ladder.

There is ample room for more lenders to put their weight behind the scheme and help to improve the options for consumers. The scheme has visibly spurred the construction industry into action by providing an outlet for demand and channelling buyers towards new builds, which is vital to keep housing production going and improve affordability.”