Bank of England publishes working paper finding Help-to-Buy’s 95% LTV lending increased first-time buying and shifted entry away from transfer-supported households

The Bank of England published Staff Working Paper No. 1,147 on how easing mortgage borrowing constraints affects entry into homeownership, using the UK Help-to-Buy programme’s 2013 reopening of the 95% loan-to-value market as a case study. Using administrative mortgage data and cross-district variation in exposure to the scheme, the paper links the policy to a sharp rise in first-time buyer purchases, with the additional entrants disproportionately drawn from households unlikely to have relied on transfers, shifting new homeowners toward higher-income borrowers. The analysis introduces a proxy for financial support based on the gap between observed and predicted down payments given borrower age and income under deliberately stringent savings assumptions. In areas with average exposure, first-time buyer purchases are estimated to have risen by around 37% relative to 2012, and the authors estimate roughly 460,000 additional households became homeowners between 2013 and 2018, equivalent to 26% of first-time buyer transactions over that period. The increase is concentrated in mortgages with a 5% down payment, and the compositional effect is driven by unsupported buyers, with mortgage originations by first-time buyers classified as unsupported rising by 47% relative to 2012 while supported buyers show no statistically significant response. The working paper is published as research in progress to elicit comments and debate and does not represent Bank of England policy.