More than 6,000 mortgage applications were made during the first three months of the U.K. government’s Help-to-Buy program, which guarantees loans to those who can only afford a small down payment, Prime Minister David Cameron said.
Mortgages totaling almost 1 billion pounds ($1.65 billion) have been sought under Help to Buy, the prime minister’s office said in an e-mailed statement today. The number of applicants has tripled since previous figures were published Nov. 11. Barclays Plc and Banco Santander SA will this month join other banks in providing loans under the program, Cameron said.
The prime minister, who today went to Southampton in southern England to visit a home purchased under Help to Buy, dismissed suggestions that it’s helping create a housing bubble.
“There are many parts of the country where house prices are barely moving at all,” Cameron was cited as saying by the Press Association newswire. “We are not helping people to buy flats or homes they cannot afford. We are helping people who do not have wealthy parents, who cannot get a big deposit together, and helping them to realize their dreams.”
The government introduced the second phase of Help to Buy in October, enabling purchasers to take out a loan with a down payment of as little as 5 percent on homes with a value of as much as 600,000 pounds.
It’s helping to fuel a housing market that saw demand rise 25 percent last year, according to London-based property researcher Hometrack Ltd., while the supply of homes for sale increased only 6 percent, pushing up prices across England and Wales by 4.4 percent and in the U.K. capital by 9.1 percent.
Almost 750 people have completed purchases under Help to Buy in the 12 weeks since the program started, Cameron said. Purchasers are seeking to buy homes costing about 160,000 pounds, below the national average of 247,000 pounds. Around three-quarters of mortgage applications are from outside London and southeast England, and more than 80 percent are from first-time buyers, according to the statement.
Help to Buy has created conflict within Cameron’s coalition government. Liberal Democrat Business Secretary Vince Cable said Dec. 22 the program should be reviewed in light of “a raging housing boom in London and the southeast.”
That put him at odds with Cameron’s Conservative Party colleague, Chancellor of the Exchequer George Osborne, who told lawmakers Dec. 12 there was no bubble in the U.K. housing market and that he’d listen to any concerns voiced by the Bank of England. Governor Mark Carney has said policy makers are monitoring the situation.