The government will not be extending the Help to Buy mortgage guarantee scheme beyond 2016 Chancellor Philip Hammond has confirmed in a letter to the Bank of England.
The move sees the end of one of former Prime Minister David Cameron’s flagship housing programmes.
Help to Buy allowed mortgage lenders to offer products with a deposit as low as 5% by means of government support.
The scheme has been open to buyers since 2014, with a total of 185,000 homes being bought under the scheme, 150,000 of which were properties for first-time buyers.
Mr Hammond said the scheme was “introduced with a specific purpose that has now been successfully achieved.”
The government has been keen to point out that help to get people on the property ladder still exists in the form of Help to Buy ISAs and shared ownership scheme.
Last month, the Bank of England told the government that the scheme was no longer required as uptake had fallen significantly, while people taking mortgage had increased sharply.
Similar schemes to the Help to Buy scheme are now available on the market at similar and in some places, cheaper prices.
Bank of England governor, Mark Carney, wrote to the Mr Hammond saying an end to scheme wouldn’t cause an impact on the number of mortgages being sold.
He wrote: “Given the decreasing usage of the scheme over time, the Committee judges that the closure of the scheme would be unlikely, in current market conditions, to affect significantly the provision of finance to prospective mortgagors, including high loan-to-value borrowers.”
There has been criticism of Help to Buy putting extra pressure on the housing market, by making cheap mortgages available and pushing up property prices.
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