A clutch of major high street banks have plunged back into the 95% mortgage market as part of the latest phase of the Help to Buy scheme.
A guide to the £12 billion Help to Buy scheme aimed at enabling homebuyers to obtain mortgages worth up to 95% of property values.
The costs will determine just how enthusiastic lenders are about jumping into the government's new scheme.
Almost 13,000 home buyers have used the first phase of the Government's Help to Buy scheme to purchase a new-build home in the scheme's first nine months, according to government figures.
Figures released by the Department for Communities and Local Government (DCLG) showed there have been 12,875 sales of newly-built properties through the Help to Buy equity loan scheme in England since its launch, with a further 6,446 sales in the pipeline.
The Government said the equity loan scheme, which helps first-time buyers and home movers to buy a newly-built home with a deposit of at least 5% of the property price, while the Government offers a loan of up to 20%, had created 46 new home owners every day since its launch.
A second phase of Help to Buy, covering the whole of the UK, was launched in October and offers state-backed mortgages to people with 5% deposits who want to buy a new-build or an existing home.
Rising demand for housing must be matched with an increase in house-building, Labour has warned.
Around 6,000 people have now put offers in on homes and applied for mortgages thanks to the Help to Buy scheme, according to the Government.
Shadow housing minister Emma Reynolds said:
Any help for first-time buyers struggling to get on the property ladder is to be welcomed.
But rising demand for housing must be matched with rising supply if this scheme is to bring the cost of housing within the reach of low and middle income earners.
Instead, under this Government, house-building is at its lowest level since the 1920s.
You can't deal with the cost-of-living crisis without building more homes. That's why Labour has committed to building 200,000 homes a year by 2020.
Two thirds of the entire UK mortgage market will soon offer products under the Government's Help to Buy scheme.
Barclays and Santander will introduce their own Help to Buy products onto the market this month, joining Lloyds Banking Group, RBS, HSBC, Virgin Money and Aldermore who have all launched products over the last three months.
House building is growing at its fastest rate since 2008 as the Government seeks to bring home ownership to an increasing number of people.
David Cameron has hailed the effect of the Help to Buy scheme after new figures revealed that around 6,000 people had put in offers on homes as a result of the policy.
"The new year is often a time when people look to make those big life-changing decisions like moving home or taking that first step on the housing ladder," the Prime Minister said.
"But too many people have found themselves frozen out of the market in recent years as a result of the size of the deposit required.
"That is why as part of our long-term economic plan we introduced the Help to Buy scheme, so hardworking people with sufficient earnings can get on, fulfil their aspirations and enjoy the security of owning their own home.
"In less than three months, the scheme has already helped thousands of people. I want to see that continue in 2014 and for Help to Buy to help thousands more realise their dream of home ownership."
More than 6,000 people have put offers in on homes and applied for mortgages thanks to the Help to Buy scheme, Prime Minister David Cameron has announced.
Nearly 750 homeowners have completed their purchases since the scheme was opened less than three months ago, with hundreds able to spend Christmas in their new homes.
In November, ministers published figures showing that in the first month after being launched more than 2,000 people had put in offers on homes and applied for a Help to Buy mortgage, and that figure has now trebled.
The mortgages, once approved, would represent nearly £1 billion of new lending to home owners.
Property website Rightmove has called on the Government to clarify its Help to Buy scheme after it was revealed over a third of the first time buyers using it, did not fully understand it.
According to Rightmove, the mortgage guarantee scheme can be used:
- Pre-owned properties
- New-build properties
- First-time buyers
- Current home owners
The equity loan section of the scheme can be used on:
- New-build properties
- First-time buyers
- Current home owners
Some 34% of first time buyers using the Help to Buy scheme admitted they are confused about the next phase of the scheme, a property website said.
The Government launched Help to Buy in October to offer state-backed mortgages to people with deposits as meagre as 5%.
Data collected from 44,000 people quizzed by Rightmove found there was even confusion among first-time buyers who claimed to understand the Government's flagship housing policy.
Nearly one quarter, 23%, wrongly thought the scheme can be used only for new-build properties.
A further third, 34%, believed it was just an extension of the equity loan scheme.Meanwhile, two fifths (42%) of home movers wrongly thought the second phase of the scheme was only for first-time buyers.
ITV News Economics Editor Richard Edgar has tweeted:
Carney announces new tool to manage lending by varying affordability tests for mortgages - ie loan to income ratio.
Carney says worried about the path house prices would take without this action. Essentially 'a stitch in time saves nine.' But cd do more...
Carney in no rush to call for an end to Help to Buy - says "it's very early days" but may step in "at any time" if he thinks it's a problem
Bank of England governor Mark Carney has rebutted claims by coalition ministers that it has the power to "turn off" the flagship Help to Buy initiative, amid fears the scheme could lead to an unsustainable housing bubble.
In a letter to Andrew Tyrie, chairman of the Treasury Select Committee, Mr Carney confirmed that the Bank's Financial Policy Committee (FPC) "does not have a veto on the scheme", though it can make recommendations on it.
Prime Minister David Cameron has lauded the Help to Buy scheme, which helps first-time homebuyers. ITV News Business Editor Laura Kuenssberg reports:
New figures show that average-income first-time buyers are making up the bulk of people taking up the government backed mortgage scheme.