Persimmon says impact of Government scheme remains muted

HOUSE builder Persimmon has yet to gain any significant benefit from the Government’s mortgage guarantee scheme because of the high interest rates being charged, the company said today.

Persimmon and its rival house builders have been some of the biggest beneficiaries of Government efforts to help home buyers and free up mortgage lending, primarily through the equity loan element of the Help to Buy scheme, which relates only to new-build properties.

Visitor levels to Persimmon’s sites between July 1 and November 5 were 20 per cent higher than a year earlier, it said. The builder says it is now fully sold for the current year, with £650m in forward sales reserved beyond 2013.

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However, it added that the impact from the second part of Help to Buy, guaranteeing up to £130bn of mortgages on new and existing homes, has been muted since its October launch because of the interest rates.

Four of Britain’s large lenders - RBS, Lloyds, HSBC and Santander UK - have signed up to this part of the scheme.

“We believe that mortgages associated with the Help to Buy equity loan scheme will remain the preferred choice for the majority of customers of the house building industry, given that interest rates for this product are significantly more competitive than those available with the government guarantee,” the company said.

Interest rates for the mortgage guarantee scheme currently stand at about five per cent.

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York-based Persimmon, Britain’s largest house builder by market capitalisation, said it has sold more than 3,000 homes under Help to Buy’s equity loan scheme, which was launched in April.

The company also said that its underlying operating margins improved by 300 basis points in the first half of the year to 15.1 per cent.