In December this year the mortgage market will wave goodbye to the Help to Buy Mortgage Guarantee Scheme. Since its introduction, the scheme has had a profound effect on the 95% loan-to-value (LTV) mortgage market, giving it a significant boost at a vital time.

As a result of the impetus from the scheme, data from Moneyfacts.co.uk can reveal that the number of mortgages at 95% LTV has risen from 56 in October 2013 to 249 today – a 444% increase.

Charlotte Nelson, Finance Expert at Moneyfacts.co.uk, 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. Furthermore, 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.

“Providers within the Help to Buy Scheme are not the only ones to boost the market, however, as other providers 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.

“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.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

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