Government shuts down Help to Buy mortgage-backing scheme The Help to Buy mortgage guarantee scheme has been scrapped by the Government according to a letter sent by Chancellor Philip Hammond […]

The Help to Buy mortgage guarantee scheme has been scrapped by the Government according to a letter sent by Chancellor Philip Hammond to Bank of England governor Mark Carney.

The scheme, which was aimed at making access to finance easier for young, first-time buyers, was one of the flagship policies of David Cameron’s government.

It was announced by Mr Hammond’s predecessor George Osborne in 2013 and described at the time as “the biggest government intervention in the housing market since the Right to Buy scheme”.

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Mr Hammond wrote in his letter than the mortgage-backing scheme’s purpose had been “successfully achieved” and added that “it will close the new loans at the end of 2016”.

‘Unlikely to affect finance’

Help to Buy’s mortgage-backing scheme allowed buyers to borrow up to 95 per cent with a 5 per cent deposit, with the government guaranteeing a portion of the repayments to encourage lenders.

Mr Hammond welcomed the Financial Policy Committee’s judgement that ending the scheme was “unlikely, in current market conditions, to affect significantly the provision of finance to prospective mortgagors” and highlighted other rungs of the Conservative government’s housing policy that remain, such as the Help to Buy ISA. The equity loan scheme also remains in place.

Government statistics published yesterday revealed that 86,341 mortgages had been completed using the guarantee scheme since its inception in October 2013, representing 3 per cent of all completions in the period. Almost 80 per cent of the loans went to first-time buyers.

Cameron’s legacy

The move will add to the perception that Theresa May is dismantling much of David Cameron’s legacy as Prime Minister.

It comes after Ms May’s first major policy announcement paved the way for new grammar schools, counter to the policy of the Cameron government and the reforms of former Education Secretary Michael Gove.

She delayed a decision on the Hinkley Point power station that had been part of No 10’s long-term plan for energy, after abolishing the Department of Climate Change in her first Cabinet reshuffle.

The reshuffle saw former “Cameroons” such as George Osborne, Michael Gove and Nicky Morgan removed, with former high-flyers David Davies and Liam Fox returning to the fold.