Builder warns lending rates are hurting Newbuy
Buyers are being put off the government’s Newbuy scheme by the ‘disappointing’ lending rates on offer, a house builder has warned.
In an interim management statement issued today, Redrow says the high rates are leading to limited take up of the scheme, despite the 95 per cent loan to value mortgages on offer.
Under Newbuy buyers of homes built by builders who are signed up to the scheme are able to access 95 per cent mortgages from participating lenders. A government-backed guarantee scheme provides security for the lenders to allow them to offer the high loan to value products.
Three lenders initially joined the scheme – Barclays, Nationwide and Natwest – and Lloyds has subsequently signed up, but the interest rates on offer are generally between 5 and 6 per cent. Other lenders are currently offering rates of between 2 and 3 per cent on discounted products.
Redrow was positive about the concept of the scheme, but said its success will depend on ‘lenders offering mortgages at competitive interest rates’. It also welcomed recent government planning reforms, but said ‘there are a number of areas where lack of clarity leads to some ambiguity’.
In the trading update, which covers 1 January 2012 to 20 April 2012, Redrow said sales activity has been encouraging, with the number of active outlets up from 73 at the start of the period to 76. It expects this to increase to 80 by the end of June.