Help to Buy scheme sees 10,000 reservations in first four months

The announcement came as industry experts called on the Government to scrap the second part of the Help to Buy scheme, due to be launched next year, following new figures showing a rise in mortgage lending to first time buyers.

Pickles said in a statement that the reservation figures showed that the equity loan scheme is giving confidence to house builders to deliver and build more homes.

New housing supply is at its highest level since 2008, with a total of 319,000 homes added to the housing supply across England between October 2010 and October 2012, he said.

“This government’s package of measures to boost the housing market is working, with house building and housing supply on the up," Pickles said. "The tough decisions we’ve taken to tackle the deficit are now delivering a sustainable increase in housing and providing real help to hard-working people."

“With over 10,000 reservations in four months, it’s clear that the Help to Buy: Equity Loan is working well. By dealing with the big challenges, we are helping thousands of young people and families get on and move up the housing ladder, and Britain is building again,” he added.

Meanwhile, data published by the Council of Mortgage Lenders, which showed that mortgage lending to first time buyers in the second quarter of 2013 was at its largest quarterly total since 2007, has prompted industry experts to call on the Government to drop the second part of the Help to Buy scheme, the Financial Times has reported.

According to the data, 25,300 loans were advanced to first time buyers in June, a 30% increase on loans advanced in June last year. The amount borrowed by first time buyers also showed an increase, with the average loan size rising to £117,000 in June up from £112,500 in May.

Experts warned that the £12 billion mortgage lending part of the scheme, which is set to be launched in January next year, will further boost demand for housing without increasing supply and thereby create another housing bubble. Under the scheme, the Government will offer guarantees to lenders offering mortgages to buyers with a deposit of between 5% and 20%.

“Should the housing market gain substantial momentum over the coming months, the case for dropping the Help to Buy mortgage guarantee scheme . . . will strengthen,” said IHS Global Insight chief UK and European economist Howard Archer according to the reports.