Lenders launch NewBuy mortgages

Barclays, Nationwide and Natwest have shown support for the Government's NewBuy scheme by launching new mortgages.

Related topics:  Mortgages
Millie Dyson
12th March 2012
Mortgages
Barclays launches NewBuy mortgages

Barclays today reaffirms its commitment to first time buyers with the launch of two competitively priced mortgages with rates from 4.99 per cent, to support the Government's NewBuy initiative which will provide mortgages up to 95 per cent loan to value for new build properties in England.

First time buyers or home movers purchasing a new build house or flat with participating builders up to the value of £500,000 will have a choice of a Barclays two year fixed rate mortgage at 4.99 per cent or a four year fixed at 5.89 per cent, both come with a £499 application fee and revert to a lifetime tracker at base + 3.99 per cent.

Andy Gray, head of mortgages for Barclays said:

"We are pleased to be one of the first lenders to be helping even more buyers with small deposits to buy new homes. We believe this will boost housing market confidence and support the flow of new housing providing positive consequences for jobs and the economy as a whole. The mortgages we have launched today give buyers a really attractive rate, and strike the right balance for Barclays and builders to offer 95 per cent mortgages in a sustainable way."

Barclays has actively been helping more first time buyers get on the property ladder and this was confirmed in its recent results, with lending to first time buyers up 22 per cent in 2011, supported through the extension of mortgages up to 90 per cent LTV in October 2011.

In 2010 Barclays pioneered a similar mortgage indemnity scheme ‘Perfect 10' with Bovis Homes to help stimulate the new build market at 90 per cent LTV, which has helped to shape the NewBuy scheme.

Under NewBuy, house builders and the Government have committed to cover a limited amount of any future losses. The house builder will ring fence 3.5 per cent from the sale and the Government 5.5 per cent which will be used to compensate lenders if they have to repossess the home and sell it for less than the mortgage value.

The NewBuy mortgages launched today through Barclays will be available on new Bovis, Barratt, Bellway, Redrow, Persimmon and Taylor Wimpey homes. Homebuyers interested in purchasing a new home should contact their local development or visit the builders website.

A typical first-time buyer purchasing a new home with the participating builder at £180,000 and requiring a mortgage of £171,000 would pay £998.65 per month on a 25 year repayment basis, when taking out the Barclays two year fixed at 4.99 per cent.

Nationwide launches NewBuy products

The Society is offering borrowers who buy a new-build house or flat in England with a builder that is registered under the NewBuy scheme the option of a three or five-year fixed rate mortgage at 95% LTV.

New rates include:

Three-year fixed rate available at 5.69% (95% LTV)

- £900 product fee, £99 booking fee (payable upfront and non-refundable) for house purchase and existing customers moving home

- £500 product fee discount for first-time buyers
   
- Product fee-free option available at 5.99%, £99 booking fee will still apply

Five-year fixed rate available at 5.99% (95% LTV)

- £900 product fee, £99 booking fee (payable upfront and non-refundable) for house purchase and existing customers moving home

- £500 product fee discount for first-time buyers

- Product fee-free option available at 6.19%, £99 booking fee will still apply

These rates match those currently available for customers purchasing a second hand property at 90% LTV.

The first phase will see products available to intermediaries only.  The Society will make the products available through branches at a later date.

Andrew Baddeley-Chappell, Head of Mortgage Strategy and Policy at Nationwide, said:

"Nationwide is committed to supporting the NewBuy scheme and is one of just a handful of lenders making products available from launch. The widening gap in housing provision is undisputed. Nationwide is supportive of this initiative that enables a return to lower deposit mortgages within the new-build sector.  

"NewBuy will boost the supply of properties, increase employment, and provide affordable mortgages to those with more modest deposits, including first time buyers. This is just another example of how Nationwide is on the borrower's side and is committed to helping them access affordable and competitive mortgage deals."

NatWest support for Government NewBuy scheme

NatWest today confirmed participation in the launch of the Government NewBuy Scheme.  The initiative aims to help 100,000 people buy a new-build home with a deposit between 5% and 10%.

- 2 year fixed 95% LTV rate 4.29% fee £499

- 5 year fixed 95% LTV rate 4.99% fee £499

High Loan-to-Value lending in today's environment is higher risk and at much higher capital costs than it was historically, however the indemnity offered by the builder and the Government makes the risk acceptable to lenders.

Moray McDonald, Mortgages Director said:

"We welcome the builders and Government sharing the risk to make this initiative possible.  We hope the increased demand it will create will help lift the economy via the construction of additional homes."

"We have maintained 90% Loan-to-Value (LTV) lending for second hand homes continuously since the financial crisis.  NewBuy allows us to now extend 90%-95% loans to new home buyers, backed by strong promotional rates."
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