‘New Buy’ Mortgage Rates Slashed!

by Mark Johnston

                                                         ‘New buy’ mortgage rates slashed!

The government’s flagship ‘new buy’ scheme has been  designed to revitalise the housing market and kick start the economy by help people with small deposits, particularly first time buyers, to buy new build properties.

This scheme hopes to help around 100,000 home buyers who have only a 5% deposit to purchase a new build property, up to the value of £500,000.

However, the Home Builders Federation (HBF) voiced concerns a couple of months after the initial launch that the scheme was   not being embraced by mortgage lenders as it should have been.

The new buy scheme run by the Home Builder Federation (HBF) and the Council of Mortgage Lenders (CML) has attracted a lot of criticism in the past for failing to offer competitive rates to prospective buyers, despite the government underwriting the mortgages.

However, Natwest has become the first lender involved in the scheme to offer mortgages at less than 5%, they dropped their rates to 4.79%

Santander has also decided to slash its lending rates for home buyers participating in the government’s mortgage indemnity scheme. The revised rates are available exclusively via Abbey for Intermediaries.

The lender has cut interest on its 3 year fixed rate from 5.49% to 4.99%, 5 year fixed from 5.49% to 5.29% and 7 year fixed rate from 5.99% to 5.29%. All of these products are up to 95% loan to value (LTV) and have a £99 fee attached.

These products also all come with a ‘home buyer solution’ which includes free valuation plus £250 cash back on completion.

Phil Cliff, director of Santander mortgages, said “this reduction in rates coupled with low upfront fees, make our New buy mortgage range the best value products available exclusively via the intermediary market”.

Halifax intermediaries have slashed rates across its range including their ‘new buy’ products. It has reduced its new buy 95% loan to value (LTV) product by 0.10% to 5.89%.

Ian Wilson, head of sales at Halifax Intermediaries, stated “we are making a number of changes to our products and are pleased to be able to continue to support first time buyers”.

Andrew Frankish, director of new homes at leading broker mortgage advice bureau, suggests that “these are fantastic rates on some very good New buy products and they should be applauded. They have clearly looked at the products over the last 3 months and have reacted positively to the good quality applications they have been receiving”.

Even though some big lenders are on board with the scheme some financial experts have still urged home buyers to treat the scheme with caution before signing up.

Recent figures from one of the biggest house builders showed that it had only sold 220 new homes under the scheme.

Mike Farley, Permissions chief executive added that “new buy has got off to a slow start”.

It therefore seems that some people are still questioning the scheme, but the hope is that the move from lenders to cut their rates will help to demonstrate that there is likely to be greater activity in the second half of this year.



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