In today's release from the Ministry of Housing, Communities and Local Government, the figures show 15,341 properties were bought using the scheme in Q1 - an increase of 61% from the same period in 2020. This takes the total number of properties bought under the scheme to 328,506, with a total value of £20.1 billion in loans and a total property value of £91.1 billion.
The majority - 82% - of the loans taken using the scheme were by first time buyers.
Sarah Coles, Personal Finance Analyst, Hargreaves Lansdown, commented:
“We’ve been snapping up Help to Buy loans in this year’s homebuying frenzy, and the 12 months to the end of March saw the highest number of loans on record. But while rising prices make this scheme particularly handy for those struggling to raise a bigger deposit, they also bring extra risks.
"Help to Buy equity loans provide an answer to the impossible question of how to buy in a rapidly rising property market. Most people who use them have a 5% deposit (54%), and the scheme stops them battling to raise a bigger percentage of the property price at a time when the average property rose more than £27,000 in a year.
"However, while Help to Buy loans offer a solution to those struggling to buy in a rising market, the way they work means the same rising market will have a sting in the tail for anyone who takes advantage. When the loan is eventually repaid to the government, the amount that needs to be paid back depends on the value of the house at that time. If you borrow 20% of the purchase price, you repay 20% of the value after five years, so when prices rise, so do your repayments.
"If you borrowed 20% from the government to buy the average property in May 2015, and then you repaid the loan in May 2020, you’d have to pay back £5,318 more than you borrowed. The rising market in the past 12 months means that someone doing the same a year later would have had to repay £8,751 more than they borrowed - so the rising market cost them almost £3,500."
