New lender joins mortgage scheme
A fourth bank has signed up to the government’s Newbuy mortgage indemnity scheme, just weeks after the project came under fire for its failure to attract enough lenders.
Halifax, part of the Lloyds Banking Group, has joined Barclays, Nationwide and Royal Bank of Scotland on the scheme, which enables new home buyers to access mortgages of up to 95 per cent the value of a home.
Between them, the participant house builders and the government will contribute 9 per cent of the price of every home sold into an indemnity fund, to help secure the mortgage with a limited deposit.
The scheme has been criticised for favouring the larger builders as they are able to use the banks’ ‘single-user cells’, rather than the ‘multi-user cells’ that will see several companies access the same pool of money. None of the first three banks to join has yet set up a multi-user cell, although Halifax has now set one up, which will be used initially by CALA Homes before other builders join the scheme.
Halifax will work with eight other builders, including Barratt, Persimmon, Bellway and Redrow. Taylor Wimpey, Galliford Try subsidiary Linden, Bovis, and Crest Nicholson will also be able to access the Halifax fund.
‘As the leading lender in the new-build market, we’re proud to supporting the Newbuy scheme,’ said Stephen Noakes, mortgage director at Halifax. ‘Newbuy will put the purchase of a new-build home back within the grasp of both first time buyers and homemovers, and will give a much needed boost to housing supply.’
Housing minister Grant Shapps added: ‘The Newbuy guarantee is offering help for thousands of people who in many cases had previously given up on the dream of home ownership. Thanks to the agreements we are striking with lenders and builders across the industry, those aspiring to get on the property ladder are now able to do so with a fraction of the deposit they would otherwise require.’