Lloyds involves local authorities in 95% LTV deal
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Lloyds TSB has today launched Local Lend a Hand, which allows local authorities to help first-time buyers get on the housing ladder with a 5% deposit.
The scheme, which is only available direct is an extension of its existing Lend a Hand scheme which allows parents to put down up to 20% of the property’s value and the borrower 5%.
With Local Lend a Hand, Lloyds TSB is inviting local authorities to take the role of the parent.
Lloyds TSB is working with Sector Treasury Services to pilot the scheme with local authorities including Blackpool, Warrington, Newcastle under Lyme and East Lothian, with a view to roll out the scheme across the UK throughout 2011.
Local Lend a Hand is for loans between £25,000 and £350,000 but the maximum loan size will be dependent on the local authority and each authority will decide where in their area the scheme will be available.
The authority will provide a cash-backed indemnity of up to 20% of the property value as additional security and will earn interest on this from Lloyds TSB. The borrower’s deposit and the local authority’s contribution must equate to at least 25% of the property’s value.
The fixed rate that the borrower will pay will be lower than the normal rate for this level of deposit.
Stephen Noakes, commercial director of mortgages at Lloyds TSB, says: “We know that a lot of young people turn to the Bank of Mum and Dad to get their foot on the ladder, but that’s not a solution for everyone.
“By developing Local Lend a Hand and working with local authorities across the UK, we’re broadening the prospect of home ownership to even more first-time buyers.
He adds: “Helping people to buy their first home is crucial in achieving and maintaining a sustainable housing market. With Local Lend a Hand, we’re taking our existing Lend a Hand product to another level and addressing the real challenges first-time buyers face.”
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Readers' comments (5)
red tape jockey | 16 Mar 2011 9:03 am
i cant imagine the drivel and form filling that this will induce let alone the horrendous advice issues that will go with it.
In my experience these kinds of deals require so much due diligence they usually actually exclude the poeple for which they are designed.
That said i bet if you work for your local council it will be a doddle.
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Steven Balmer | 16 Mar 2011 11:29 am
I'm not sure I would want my local council accounting for 20% of the value of someone's house. Lots of people in the public sector are being made redundant so this may be yet more bad taste and atrocious timing. Is this the sort of creative lending which caused so much angst in the first place. If someone can afford the house they buy it, if they cant they don't - simples.
Just seems another attempt by Lloyds to ensure the direct model takes further precedence and they can claim to be helping first time buyers, as opposed to further destroying fair competition.
Bet the rates will not be that cheap either.
The government, if they are to get involved, should concentrate in re-introducing competition instead of single lender serving schemes like this, I hope its a flop.
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Paul | 16 Mar 2011 12:13 pm
Instead of giving money to builders/developers/bankers (think about it) why not just let house prices adjust down naturally and use the money on local services, instead of cutting them. It seems to be a futile attempt to prop up the housing ponzi.
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David Lawrenson | 16 Mar 2011 4:52 pm
Seems a bit wasteful to us too.
I'm also rather surprised there is money available in the govt for schemes like this at the moment.
Surely money should be prioritised for those in greatest housing need.
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Leslie Squires | 16 Mar 2011 6:05 pm
Lloyds TSB are simply replacing the MIG with an insurer with an alternative arrangement involving the local authority. The lender's exposure remains at 75% ltv. If it helps first time buyers onto the property ladder then it is better than nothing, but one has to ask whether it is a viable proposition for local authorities in these economic times?
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