Lenders Sign Up To Help to Buy Scheme.

by Mark Johnston

Lenders Sign Up To Help to Buy Scheme.

The budget in March saw the announcement of the help to buy scheme. The scheme offers equity loans up to 20 per cent to new build home buyers, who must then contribute a deposit of at least 5 per cent on properties valued at up to £600,000.

Help to Buy is intended to be a dramatic intervention to get the housing market moving. The initiative is however an extension to existing government programme New Buy.

Peter Williams, executive director of the Intermediary Mortgage Lenders Association, pointed out that “improving mortgage access is only part of the process of boosting the property market and construction industry. But because both build on existing schemes, we might hope there will be a quicker impact bringing new momentum to the market for both first time buyers and existing owners”.

After its announcement the scheme was then officially launched in April this year.

However, some industry insiders believe that the timing between the announcement and the launch was very tight.

Currently only Halifax, Lloyds TSB, Barclays and Nationwide building society have offered products to cater for the government assisted scheme.

A spokeswoman for Barclays said  “We are accepting applications on our existing FirstBuy products which will be rebranded as ‘Help to Buy’ over the coming weeks.”

Nationwide building society is the latest lender to sign up to the help to buy mortgage scheme.

Products available from the building society on the scheme include a 2.54 per cent two year fixed rate for up to 7 per cent loan to value (LTV) with a £900 arrangement fee.

First time buyers pay a reduced fee of £400. A feeless two year product, with an interest rate of 2.94 per cent and a three year product are also available.

It seems that Natwest, which currently offers the FirstBuy product, has yet to put out an updated version of the product which caters for the new elements of the scheme.

NatWest head of sales Mark Bullard said: “Schemes that give first time buyers a helping hand are very welcome and we are pleased that we will be participating in both the Help to Buy and NewBuy schemes.

Sue Anderson, head of member and external relations at the Council of Mortgage Lenders (CML), says “Lenders have a diligence process to go through and all the details of the scheme need to be known before they can complete their decision making process.”

Whether more lenders take part in this particular scheme will depend on the amount of enquiries the others receive!

Andy Frankish, new homes director at Mortgage Advice Bureau, “I am already speaking to a number of lenders but there does not seem to be much urgency around supporting the product”.

All this said some critics have argued that schemes such as Help to Buy are not the real solution to Britain’s housing crisis and all they really do is  keep house prices artificially high, which then gives people no choice but to take out huge loans which could run out of control if interest rates rise.



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