Help to Buy 2 Gets Strong Start with £365m in Applications

The UK Government's extended Help to Buy scheme, which assists people looking to buy houses, has had a good start with a significant number of home buyers applying in the first month of launch.

State-backed Royal Bank of Scotland (RBS) and Halifax, which enrolled for the scheme, said they have received a total of 2,384 applications, worth about £365m ($585m, €437m) in mortgages.

RBS received 1,075 applications, of which it has approved 169 so far. Five of those approved had already completed purchases.

Halifax, part of Lloyds Banking Group, said it received 1,309 applications, of which 80% came from new home buyers. Region-wise, the majority of applications had come from outside London and the southeast of England, where property prices are higher.

"We're receiving a high level of interest but, more importantly, this is translating into full mortgage applications where borrowers are now well on the way to buying their homes," Halifax mortgage director Stephen Noakes said.

"The applications show that through the scheme we're lending to borrowers who can afford a mortgage but, until now, have not had the necessary deposit."

Three quarters of the applications were from new home buyers. The average price of the property they are planning to buy was £167,565.

2015 Election in Mind

The UK government originally launched the Help to Buy scheme in April to assist first-time buyers to get on to the housing ladder.

Subsequently, it announced the second phase of the scheme extending benefits to existing home owners and accelerated the launch of the second part introducing Government-guaranteed mortgages on 8 October. The second phase guarantees up to £130bn of mortgages on new and existing homes.

The scheme helps potential home buyers to purchase a property valuing up to £600,000 in two ways - mortgage Guarantee and equity loan. The schemes are intended to help potential home buyers who can afford mortgage payments, but not a large deposit.

"Four weeks in and its clear that Help to Buy is already delivering," said Prime Minister David Cameron.

"Most Help to Buy applicants are first-time buyers, young and have a roughly average household income. This is all about helping hardworking people get on the first rung of the property ladder."

The Conservative party-led government is pushing people-friendly schemes as it heads to an election in 2015.

Only four British lenders - RBS, Lloyds, HSBC and Santander UK - have so far signed up to the second phase.