Members of the Big 4, CBRE and Chestertons, have been passing comments this week on how the new Help to Buy ISA could in fact have a negative affect on house prices and mortgage rates in the longer term.
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Ironically, what is being set in place to supposedly help first time buyers with saving for a deposit to enable them to access the property ladder could in fact hinder the housing market in terms of both rates for lending and the price of property.
How mortgages could be affected
An increase in mortgage applications from accessibility and awareness could simply result in a “supply to demand” scenario, pushing up the cost of lending.
There has already been speculation around mortgages linked to the Help to Buy Scheme in so much that some lenders are making it difficult for borrowers to remortgage with a competitive rate of interest after the initial two year period.
Read more: Help to Buy scheme could mean high rate traps
How house prices could be affected
The Help to Buy ISA involves a contribution of £50 from the government in line with contributions of £200 from the potential homebuyer. To achieve the maximum £3,000 benefit it will take 4 years of saving, in which time economical experts predict that the house prices could have increased by £40,000.
Senior analyst at Chestertons commented “it’s not as attractive as it would first seem”.
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