Call for your free quote 0800 955 0058

MPs question role of Bank of England in Help to Buy scheme

The Treasury Select Committee has asked the Bank of England to clarify its Help to Buy role as property prices rise.

The Bank of England has received new powers from chancellor George Osborne to ensure the Help to Buy scheme did not result in a property bubble.

House prices are likely to rise and benefit existing homeowners such as remortgage buyers giving them an opportunity to release capital which they can use to improve their home such as adding an extension or new kitchen.

However, MPs are unclear about the “scope and limits” of the Banks role and the degree it can modify the scheme.

How Help to Buy works

The first phase of the Help to Buy scheme is available for new-build properties enabling people to buy homes with a 5% deposit and receive a further 20% interest free equity loan guarantee from the government.

The remaining 75% would be a mortgage loan from a participating lender and the scheme was limited to new builds. Phase two can be accessed by first time buyers and home movers where the government guarantees 15% of the property value.

The scheme requires a 5% deposit from the homebuyer and a 95% mortgage from a lender available on properties valued up to £600,000.

David Cameron has said the scheme has helped first time buyers with 75% of applications from outside of London and the south east. On average people borrow £155,000 and the average price is £163,000 compared to the UK average price of £247,000.

The scheme promotes new homeownership for people that are renting and is not available to switching remortgage buyers or buy-to-let investors.

Scope of Banks powers

To meet concerns from critics of the Help to Buy scheme creating a property bubble the Bank of England now has greater powers.

The Bank can reduce the £600,000 property value limit to reduce the size of the market affected by the scheme. It can also recommend to the Treasury to increase the fee charged for the government guarantee, currently set at 0.9% to lenders.

MPs are concerned the Bank could be influenced by government policy.

The Treasury Committee chairman Andrew Tyrie has asked for clarification on how the bank can remain independent and fulfilment of its statutory responsibility for financial stability.

Help with the deposit for a new home can come from family members as the equity release buyer can access cash using a lifetime mortgage and gift to a child or grandchild.

What are your next steps?

Speak to our LCM mortgage advisers if you are planning to move home, buying your first home, remortgaging your existing home to a new cost effective mortgage deal or are a buy-to-let investor.

Learn more by using the mortgage cost calculators, equity release calculator and property value tracker chart. Start with a free mortgage quote or call us and we can take your details.

For equity release buyers our London City Mortgage brokers can recommend lifetime mortgages allowing you to receive cash from your property to help maintain your standard of living as costs rise or even buy a more expensive home.

Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.

Mortgage Best Buys

These are examples of mortgage products we can approach with many more offering interest rates and flexibility to meet your needs.

1.16% Fixed Rate
60% Loan to Value
£1,525 App Fee
Until 01/11/2022
Reverts to 4.09%
1.18% Fixed Rate
60% Loan to Value
£1,034 App Fee
Until 31/10/2022
Reverts to 3.59%
1.17% Fixed Rate
60% Loan to Value
£1,025 App Fee
Until 31/09/2022
Reverts to 3.59%
1.19% Fixed Rate
60% Loan to Value
£999 App Fee
2-Years Time
Reverts to 3.59%

The latest mortgage news

25 Jun 2021

Seaside towns in Britain with house prices up 10pc due to strong demand

Demand for coastal living has seen house prices in Britain’s seaside towns rise 10% over the year as homeowners change their lifestyle.

24 Jun 2021

House prices at record levels with lack of property choice for buyers

Supply of properties on the market and available to buyers is an all-time low at the same time house prices are at record levels.

11 Jun 2021

Prices for house sales are rising four times faster than flats

Strong demand for houses has driven price growth up 5.2% in the last year which is over four times more than the 1.1% growth for flats.

28 May 2021

Fixed rate mortgage deals fall to under 1pc as lenders compete for borrowers

Fixed rate mortgages are cut to 0.99% for borrowers with large deposits looking to remortgage as competition increases from lenders.

Call for your free quote 0800 955 0058


    Equity Release may involve a Lifetime Mortgage or a Home Reversion Scheme. To understand the features and risks, please ask for a personalised illustration. Equity Release may affect your entitlement to means tested state benefits and will impact on the size of your estate. For Equity Release London City Mortgages charge a fixed fee upon completion of £695. For Mortgages a fixed fee is charged on application. Typically this is from £295 up to £495 for the services selected.


    Equity Release - Equity Released from your home will be secured against it. Mortgages – Your home may be repossessed if you do not keep up repayments on your mortgage or other loans secured against it. Think carefully before securing other debts against your home. The information contained in this website is subject to the UK regulatory regime and is therefore intended for consumers based in the UK.


    9th Floor, 30 Crown Place
    London, EC2A 4EB

    0800 955 0058


    London City Mortgages Limited is a registered company in England & Wales under company number 09278987. London City Mortgages Limited is an Appointed Representative (FCA no. 655965) of Blackstone Moregate Limited (FCA no. 459051) which is authorised and regulated by the Financial Conduct Authority. LCM and LCM Equity Release are trading names of London City Mortgages Limited.

    2021 © London City Mortgages.
    Website designed & developed by Spyre Media