20 May

How is the Mortgage Guarantee Scheme stacking up to Help to Buy?

How is the Mortgage Guarantee Scheme stacking up to Help to Buy?

Launched in April of last year, the Mortgage Guarantee Scheme allows lenders the option to purchase a guarantee on mortgage loans for those with less than a 10% deposit. But how does it compare to the existing Help to Buy equity loan scheme.

The MGS is a more market encompassing version of the Help to Buy scheme and can be utilised on new-build and existing homes by first-time buyers, those remortgaging and home movers. However, it’s not open to buy-to-let purchases, second homes or properties with a market value in excess of £600,000.

But how has it been received and how does it compare to the popularity of Help to Buy equity loan scheme?

Take up vs Help to Buy (equity loan scheme)

Since Q2 of 2021, 12,388 sales have completed with the help of the scheme, with the value of these loans exceeding £2.2bn, fuelling almost £2.4bn worth of property purchases.

During the same period, the Help to Buy equity loan scheme aided 27,112 transactions with £1.9bn in equity loans facilitating £7.9bn worth of property sales.

However, Help to Buy has been established for far longer in its various forms and when comparing the success of the MGS to the early days of the Help to Buy equity loan scheme, the uptake is far more similar. In fact, when Help to Buy first launched in Q2 of 2013, it helped just over 14,000 buyers to get a foot on the ladder in the same time the MGS has helped nearly 13,000 buyers.

Where is homebuyer appetite for the MGS the strongest?

So far, 24% of the 12,388 transactions to complete with the help of the MGS have been located in Scotland. The North West has also been home to a high percentage of MGS completions at 12%, as has the South East at 10%.

Northern Ireland (3%) and London (4%) account for the lowest level of MGS transactions.

Although it’s open to all buyers, 86% of all completions coming via the MGS have been first-time buyers.

While London may be home to one of the lowest levels of MGS transactions, 92% of those utilising the scheme in the capital are first-time buyers.

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