First lenders and house builders sign up to Newbuy
The government has named the first house builders and lenders that will offer products under its new build mortgage indemnity guarantee scheme.
Three lenders – Barclays, Nationwide and Natwest – will offer 95 per cent mortgages on new homes through the Newbuy scheme. Barratt, Bovis, Bellway, Persimmon, Redrow, Linden Homes and Taylor Wimpey are the builders that have signed up (see details, below).
When the government first announced the mortgage guarantee scheme in November it said seven lenders and more than 25 builders had agreed to take part ‘in principle’.
The Communities and Local Government department said other ‘leading names’ are expected to join the scheme ‘in the coming weeks and months’.
Under Newbuy buyers of new homes will be able to access mortgages worth 95 per cent of the value of their home. The builders will pay 3.5 per cent of the purchase price into a fund, which will be backed by the government to a total value of 9 per cent.
If a home is repossessed and is worth less than the mortgage then lenders will be able to draw on the fund, with the stake put in by the builders being accessed first.
The government hopes the scheme will support 100,000 buyers.
The initiative was officially launched today by prime minister David Cameron and housing minister Grant Shapps.
At the same time the ministers released more details of the revitalised right to buy.
The prime minister said: ‘It’s no good hoping people will climb the property ladder if the bottom rung is missing. Affordable properties and available mortgages are vital.
‘So we’re working with leading house builders and lenders to get the scheme underway.
‘It’s a vital boost to the housing market, giving people good affordable new homes and backing thousands of jobs in construction in the process.’
The House Builders Association, which mainly represents small and medium-sized builders, warned that Newbuy will give larger companies an ‘unfair competitive advantage’ over smaller builders.
Roger Humber, strategic policy advisor to the HBA, said: ‘We are surprised that the government has underwritten the scheme without knowing whether, or when, customers of all sizes of house builders can access it.
‘Promises have been made that it will be available to help purchasers from all sizes of house builder and the HBA will be monitoring its roll out carefully, to ensure that does happen quickly.’
The first Newbuy deals
- Barclays who will offer 95 per cent Loan-to-Value mortgages on properties built by Barratt, Bellway, Bovis, Persimmon, Redrow and Taylor Wimpey at just 4.99 per cent fixed rate for two years and 5.89 per cent fixed rate for four years
- Nationwide who will offer 95 per cent Loan-to-Value mortgages on properties built by Barratt, Bovis, Bellway, Persimmon, Redrow and Taylor Wimpey at just 5.69 per cent fixed rate for three years and 5.99 fixed rate for five years; and
- NatWest who will offer 95 per cent Loan-to-Value mortgages on properties built by Barratt, Bellway, Bovis, Linden Homes, Persimmon, Redrow and Taylor Wimpey at just 4.29 per cent fixed rate for two years and 4.99 per cent fixed rate for five years.