Halifax joins home loan indemnity scheme

The former building society, owned by Lloyds Banking Group, yesterday said it is offering mortgages under the NewBuy indemnity scheme, about a month after its launch.

The scheme aims to reduce the deposit burden for cash-strapped buyers to just five per cent, meaning they can borrow up to 95 per cent of the value of a home. It is targeted specifically at newly-built homes in a bid to boost construction rates.

Stephen Noakes, Halifax mortgage director, said: “As the leading lender in the new-build market, we’re proud to support the NewBuy scheme. NewBuy will put the purchase of a new-build home back within the grasp of both first-time buyers and homemovers, and will give a much needed boost to housing supply.”

Halifax is the fourth lender to offer mortgages under the scheme, and will initially be working with nine housebuilders.

A spokeswoman said Halifax always intended to join the scheme. “For a new scheme such as this it can take some time to get the products finalised and set up on the system,” she said.

Halifax has also launched a ‘multi-user cell’, allowing lower volume builders to join up as well as bigger housebuilders.

Under the scheme, participating housebuilders pay 3.5 per cent of the value of a home into an indemnity pot held by the lending bank. In the event of a repossession, the lender will be able to cover losses through the housebuilders’ fund as well as the buyer’s deposit, before calling on the Government guarantee.

The Government claims the scheme allows banks to lend at loan-to-value ratios which would otherwise have been “impossible”. It should also improve liquidity for banks, by providing additional capital.

Housing Minister Grant Shapps said: “The NewBuy guarantee is offering help for thousands of people who in many cases had previously given up on the dream of home ownership.”

Halifax is offering buyers with just a five to 10 per cent deposit a two-year fixed mortgage at 5.99 per cent.

NewBuy does not just target first-time buyers, but also people looking to move to a new home, many of whom have been unable to release equity as property prices have fallen.