Mortgage indemnity scheme hits 600 reservations
New figures from the Home Builders Federation have showed that 600 people have made reservations for new homes under the government’s Newbuy mortgage indemnity scheme during its first three months.
The HBF lauded the figure as ‘a remarkable start’ but the scheme has come under fire from some quarters for not producing low enough interest rates.
Five mortgage lenders and 17 builder have now signed up to the scheme, which allows buyers to buy a new build home with a 5 per cent deposit through the use of a guarantee fund into which the government and house builders contribute 9 per cent of the purchase price.
However, builders have repeatedly criticised lenders for continuing to offer interest rates of almost 6 per cent, despite the existence of guarantees.
Stewart Baseley, executive chairman of the HBF, which helped develop the product alongside the Council of Mortgage Lenders, said reaching 600 reservations represented ‘a fantastic start’.
He added: ‘Newbuy, is really starting to take off and allows people to secure a home with a 5 per cent deposit. In addition, many builders operate shared equity schemes that make buying more affordable.
‘Over the coming years Newbuy will make a real difference and help tens of thousands of people realise their ambitions of home ownership.
‘In turn this will then help kick-start new home construction, creating economic growth and thousands of jobs across the country.’