Top lenders sign up to mortgage-assistance scheme

Three major mortgage lenders launched new products yesterday as part of the Government-backed scheme designed to boost demand for newly built homes.

The NewBuy scheme is forecast to help as many as 100,000 people locked out of the property market by heralding the return of 5 per cent deposits rather than the 20 per cent typically demanded by lenders since the credit crunch.

The Government will stump up 5.5 per cent of the value of a mortgage on a home worth up to £500,000 in England, while the housebuilder will put up 3.5 per cent to help guarantee mortgage lenders against any losses and stimulate a wave of fresh lending.

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Barclays, Nationwide Building Society and NatWest Home Loans said they are ready to start lending under the scheme, while Santander aims to make products available by the middle of the year and Halifax is expected to follow suit.

The support of lenders is vital if the scheme is to succeed and there had been fears they would fail to put their weight behind it.

It is hoped the initiative will not only help buyers struggling to raise the deposit required for a new home but will also create new work – and jobs – in the construction industry. Barratt Developments said the scheme was already proving popular and nearly 20,000 people had registered interest on its website.

Council of Mortgage Lenders’ director general Paul Smee said: “NewBuy will contribute not just to housing supply, but also to economic growth in the UK, and it will reopen access to many creditworthy borrowers to buying a new build property.”

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Barclays said it will provide mortgages with a rate of 4.99 per cent on up to 95 per cent of a property’s value, meaning a typical first-time buyer purchasing a new home from a participating builder at £180,000 and requiring a £171,000 mortgage would pay £998.65 a month on a 25 year repayment basis.

NatWest, which is part of taxpayer-backed Royal Bank of Scotland, is offering loans with interest rates from 4.29 per cent of up to 95 per cent of the value of a property.

It still offers 90 per cent loan-to-value mortgages but the new scheme means it will lend on deposits of just 5 per cent.

Nationwide is offering loans from 5.69 per cent on up to 95 per cent of the value of the property. It said the rates are the equivalent to loans it offers customers buying a second-hand property with a 90 per cent loan-to-value mortgage.

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