NewBuy Scheme to give boost to house builders and the economy
The launch of the UK government’s NewBuy scheme which provides 95% mortgages for people buying new homes has been widely welcomed by the property industry.
It is also hoped that the scheme will give a boost to house builders and the economy, and see thousands of workers returning to building sites across the country.
Under the scheme three major high street lenders and seven of the country’s biggest building firms will begin to offer mortgages on newly built properties to people with just a 5% deposit, a financial product not available anywhere else in the market.
Other leading names, including smaller house builders, are expected to follow their lead in the coming weeks and months.
It means that instead of a typical buyer requiring a £40,000 deposit for £200,000 property, they will now only need £10,000. The government and house builders will help provide security for the loan, so if the house is then sold for less than the outstanding mortgage total the lender will be able to recover its loss.
Barclays who will offer 95% Loan to Value (LTV) mortgages on properties built by Barratt, Bellway, Bovis, Persimmon, Redrow and Taylor Wimpey at just 4.99% fixed rate for two years and 5.89% fixed rate for four years.
Nationwide will offer 95% LTV mortgages on properties built by Barratt, Bovis, Bellway, Persimmon, Redrow and Taylor Wimpey 5.69% fixed rate for three years and 5.99% fixed rate for five years.
NatWest who will offer 95% LTV mortgages on properties built by Barratt, Bellway, Bovis, Linden Homes, Persimmon, Redrow and Taylor Wimpey at 4.29% fixed rate for two years and 4.99% fixed rate for five years. In addition, Crest Nicholson will be joining the scheme imminently.
The NewBuy Guarantee will support an estimated 50,000 jobs in construction and related industries by increasing demand for newly built homes and will also help jump start the stalled housing market as people begin to move, ensuring more newly built and older properties become available to buy, according to housing minister Grant Shapps.
‘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. This government doesn’t just talk about expanding home ownership,’ said Shapps.
According to Home Builders Federation executive chairman Stewart Baseley NewBuy will help thousands of people to meet their aspirations to buy a new home, freeing up the housing market and helping first time buyers and those unable to take the next step on the ladder.
‘The scheme will also provide a vital kick start for the house builders large and small who will be able to build the homes and create the jobs that the country desperately needs. The government deserves credit for backing NewBuy and enabling it to become a reality. It shows that housing is in its rightful place at the top of the political agenda,’ he added.
Council of Mortgage Lenders director general Paul Smee said that these mortgages will help creditworthy borrowers who simply haven’t yet managed to build up a large enough deposit to gain access to finance to buy a newly built home.
Mark Clare, chief executive of Barratt Developments said that the key thing is that people will no longer need deposits of up to 20% which gives creditworthy buyers the best opportunity for five years to get on the housing ladder.
Nearly 20,000 potential home buyers from all around England have pre-registered their interest on the company’s website with the weekly registration rate now hitting 1,500.