ESTATE agents in Exeter are expecting a surge in interest from house-hunters in the wake of a surprise announcement from David Cameron.
The Prime Minister caught property experts unawares by bringing forward the launch of the second part of the Help to Buy scheme on the eve of the Conservative party conference.
The mortgage guarantee scheme is intended to improve access to high loan-to-value mortgages. Originally due to take effect in January 2014, applications opened this week – three months earlier than expected.
While homebuyers will not be able to complete on a purchase using the scheme until the New Year, the move is expected to provide a shot in the arm for the local property market at a time when activity is traditionally quietening down in the run-up to Christmas.
The first phase of Help to Buy, launched in April, sees the Government providing homebuyers in England with equity loans of up to 20 per cent of the price of a new property. Homebuyers need at least a five per cent deposit, with a 75 per cent mortgage covering the rest.
The second phase, which had been due to launch in January, will see the Government underwriting 15 per cent of the value of a mortgage, allowing people to buy properties with a five per cent deposit. It will apply to all home purchases in the UK of up to £600,000 – not just first-time buyers or new-build properties.
Applications for loans from the scheme have now been brought forward to this week, but the loans will not be paid out until January 1. This means anyone hoping to move by taking advantage of the second phase of Help to Buy will not be able to complete their home purchase before 2014.
Roger Wilkinson, of Wilkinson Grant in Exeter, said: "This is the most significant government intervention in the property market since former Conservative Chancellor Nigel Lawson withdrew dual tax relief on mortgages in 1988.
"From October 7, thousands of local people currently in rented, living with parents or locked into 'zombie' mortgages might now be able to buy, or move up the market, with just a five per cent deposit.
"The early introduction of this scheme – three months sooner than originally announced – has taken the property sector by surprise and will offer people the chance to get on the property ladder much sooner.
"Our advice to would-be buyers is to speak to an independent financial advisor who is familiar with the scheme to see if you qualify and to search out the best rates available. Currently only state-owned banks are signed up to the scheme but this announcement will bring other lenders into the market.
"There have been suggestions – including from coalition minister Vince Cable, just days before the announcement – that this scheme might create a housing bubble by fuelling demand in a market where property is in short supply – but we believe it will release many properties to the market where the owners can afford a bigger mortgage but could not previously afford the deposit for their next home.
"More details will shortly be released and our own appointed mortgage advisors will shortly be holding a series of Help to Buy evenings in our Exeter offices to help provide more information and guide people through the process."