George Osborne’s Help to Buy mortgage schemes, introduced in 2013, primarily benefited higher-income households, with little discernible effect on social mobility, according to a recent analysis by the Institute for Fiscal Studies (IFS). The findings challenge the initial aims of the schemes, which were designed to assist a broader range of first-time buyers in getting onto the property ladder.
The Help to Buy initiative, which included equity loans and mortgage guarantees, was launched during a period of significant house price growth across the UK. According to data from property portals like Rightmove and Zoopla, average house prices have seen substantial increases since 2013, although growth has varied regionally. For instance, while London and the South East experienced rapid price inflation in the mid-2010s, other regions like the North East saw more modest gains.
Mortgage rates have also played a crucial role in housing affordability. In 2013, interest rates were historically low, making mortgages more accessible. However, recent years have seen a tightening of monetary policy, with the Bank of England raising the base rate. This has led to higher mortgage rates, impacting affordability for many potential buyers, particularly those needing to remortgage or secure new deals.
The IFS report suggests that while the schemes did help some individuals purchase homes, those with higher incomes were better positioned to take advantage of the support, ultimately exacerbating existing inequalities rather than addressing them. This raises questions about the effectiveness of broad-brush government interventions in the housing market and their unintended consequences on different socio-economic groups.