Fifth lender joins government mortgage scheme
A fifth bank has joined the government’s mortgage indemnity programme for buyers of new-build homes.
Santander has become the fifth lender to sign up to the Newbuy scheme and will now offer 95 per cent loan-to-value mortgages for properties built by four house builders.
The bank is offering three and five-year mortgages at 5.49 per cent and seven-year deals at 5.99 per cent. It will initially offer loans to buyers of properties built by Barratt Homes, Berkeley Homes, Bovis Homes and Persimmon.
Santander has joined Barclays, Nationwide, Natwest and Lloyds-owned Halifax in supporting the scheme.
Last month, Redrow, one of seven builders to sign up in the first wave of the scheme in March, said that the interest rates being offered – generally between 5 and 6 per cent – were not encouraging prospective buyers to use the product.
Newbuy allows buyers of new-build homes access to mortgages with deposits as low as 5 per cent by creating an indemnity into which the government and builders put a combined total of 9 per cent of the price of every home sold. This then acts as a guarantee for the low-deposit mortgage. The loans are available on English properties costing under £500,000.
The scheme received a further boost yesterday when Higgins Homes also announced that it had joined.
‘Newbuy is a great initiative to help more people enter the property market or move around it,’ said Jeremy Marcus, sales and marketing director at Higgins. ‘Over the past few years we have been bombarded with statistics about how difficult it can be to build up a sizeable deposit and secure a mortgage, so this scheme really does tackle the problems encountered by many home buyers.’
The house builder has already identified at least four sites in the south of England which could have homes eligible for Newbuy.