Shared ownership tied to bank rescue
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Halifax agreed to continue to issue shared ownership mortgages to secure its share of last week’s £37 billion bank bail out, Inside Housing has learned.
The Treasury imposed the condition on the bank in return for a £17 billion cash injection that will see the government take ownership of a large chunk of the giant bank expected to be formed by the merger of Halifax parent HBOS and Lloyds TSB.
Halifax provides about half of the country’s shared ownership mortgages and is the only major lender in some areas, meaning its mortgages are crucial to the government’s homebuy schemes.
A Treasury spokesman said: ‘What we have asked them to do, and they have agreed, is to make available the same levels of funding for mortgages and small businesses that they did in 2007.
‘They need to make sure, in terms of the agreement to provide a capital injection, that they are promoting these products and they are competitive.’
He added it was a non-prescriptive ‘general principle’ and the government would not interfere in the rate of lending.
Last week Halifax dropped its mortgage offer so most buyers are only offered a 90 per cent instead of 95 per cent mortgage. This means a 10 per cent deposit is needed even on a 50 per cent share of a property.
A Halifax spokesman said 95 per cent mortgages are still available for first-time buyers.
Mervyn Jones, chief executive of homebuy agent Yorkshire Housing, said Halifax was the only major bank lending for shared ownership in the area.
‘Alistair Darling has been saying they want the mortgage market to continue to provide this. We think they have put pressure on HBOS and Lloyds, and it is part of the deal,’ he said.
Mr Jones warned that higher deposits could push mortgages out of reach for potential buyers of shared ownership properties.
Graeme Moran, managing director of Metropolitan housing association, said he was ‘really encouraged’ that Halifax is required to continue lending.
‘It is something I advocated as chair of the homeownership advisory panel,’ he said. ‘It would be really bizarre for government-backed banks not to support good quality housing policy. Also commercially, affordable homeownership schemes, where you have got a good proportion of government money, are safe schemes.’
A Halifax spokesman said it would not discuss the terms of the government deal, but added: ‘We are committed to this type of mortgage whether we were told to or not.’
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Readers' comments (4)
Stephen Gallaghan | 21/10/2008 12:49 pm
Unfortunately, the Halifax seems to have gone back on their word about 95% mortgages for first time buyers of shared ownership. i work for Contour in the North West and 2 of our customers, both 1st time buyers, good credit history looking for shared ownership have applied to the Halifax for a mortgage this week and been told that to qualify they would need a 10% deposit. they told the Halifax that they both had 5% deposits, the mortgage company said no and refused to discuss.
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Trinny | 23/05/2009 5:09 pm
They say 5%, but they don’t have to do it! And they won’t.
I wander what the interest rate with 10% deposit would be?
Something very high?
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Jason | 03/07/2009 12:06 pm
Yep, the same here I work for an RSL in the North West and Halifax tended to be our most popular lender only asking for 5%, but thats now gone out of the window 10% or nothing!!!
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Chris | 18/09/2009 7:10 pm
My son and his partner applied for a shared ownership mortgage from the Halifax in July, they were sent an offer of mortgage which they read through and realised the solicitor was incorrect on the offer, they then rang to let them know the correct solicitor, they were then told that the offer was being withdrawn! The Halifax wanted more bank statements, these were duly sent, they have been told today 18/09/09 that they've been turned down but if they wait two months and pay a big deposit as well they will get a mortgage! They have now lost the reservation fee of £750 for the Bellway home and they are also out of pocket for the financial advisor that Bellway recommend and the valuation fee which for both they were charged another £600 plus, how the hell is all of this helping first time buyers, it all seems like one big scam!!
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