Woolwich launches 90% LTV deal with Bovis
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Barclays, through its mortgage arm Woolwich, has launched a 90% LTV mortgage available for people purchasing a new home with housebuilders, Bovis Homes.
The scheme, designed by insurance broking group Jardine Lloyd Thompson in partnership with Barclays and Bovis Homes, will also provide buyers with free unemployment protection for three years from the date of exchange.
The new mortgage is fixed at 4.99% for two years for loans up to 90% LTV. After the first two years it reverts to a lifetime tracker at base + 2.49% which equates to just 2.99% at today’s base rate. The arrangement fee is £999.
Andy Gray, head of mortgages for Barclays, says: “The deal struck today is about helping to get the housing market back on the right track but in a way that is sustainable in the long term. We believe this mortgage provides an affordable rate at 90%, striking the right balance for Barclays, Bovis Homes and its customers.
“We are now starting to see more competition and consumer confidence return to the market and we believe this gives the right level of rates with the security of a fixed rate deal for the first two years, ensuring that those with limited equity have the security of knowing what their payments are in the early years.
’This is about giving good rates at the right time which is excellent news for home-buyers and the housing market.”
David Ritchie, chief executive of Bovis Homes, says: “In the current market, the ability of purchasers, especially first-time buyers, to access high loan to value mortgage finance has been severely curtailed.
’Working with Barclays, we have agreed ‘The Perfect 10’ mortgage package, which allows our customers to borrow up to 90 per cent of the value of their new Bovis Home at a very attractive fixed interest rate.
“Many of our potential customers are struggling to save the higher deposits required by the mortgage market today and this innovative new product, which is currently only available to us, will mean that more customers will be able to buy a new Bovis Home now, at a more affordable cost.
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Readers' comments (13)
Colin | 9 Jun 2010 1:22 pm
a positive step, i assume the only caveat will be that buyers must use Bovis in house FS to get the deal ??
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Mortgage Broker N3 | 9 Jun 2010 1:25 pm
I thought Woolwich had a commitment to brokers and agreed not to dual price?
....is this available to brokers?
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Anonymous | 9 Jun 2010 1:30 pm
And in persuance of their strict non dual pricing policy will this product be available to all advisors
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Glenn Peniston | 9 Jun 2010 1:45 pm
More positive news, signs that competition and higher ltv mortgages are returning to the market, it may only help a few but at least its a start.
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Anonymous | 9 Jun 2010 1:55 pm
I like the woolwich as they do not duel price like some lenders
However, how can the woolwich come out and offer a 90% ltv deal to Bovis fixed at 4.99% for 2 years, and yet the best they can offer to intermediaries is at 85% ltv for a purchase at 6.19% fixed for 3 years.
I would be very happy if Woolwich offered 2 year fixed rate at 4.99% at 85% to the rest of us.
I know they want to encourage new build properties however these are higher risk than a normal purchase so why have they been priced so competitively?
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Avenue & Co Private Finance | 9 Jun 2010 4:04 pm
This may be seen as attractive to borrowers, but for lenders, a 90% LTV on new builds for first time buyers certainly poses a mroe risky proposition and one would question their strategy behind this.
With rates and taxes set to rise and as more property goes up for sale, prices
will inevitably be under pressure as supply increases.
And if, like most lenders who operate an overall aggregate lending cap of around 20-25% on a single development, Bovis would effectively be limiting the number of borrowers who are First time Buyers on a block and Woolwich will have to start turning many away, and as Woolwich are one of only a handful of lenders really lending, they may end up owning over 70% of a single block unless they impose caps.
Looking at some of the Bovis home prices, you will have to have a pretty good income level to qualify too. Is this good news for borrowers? - Yes, but Woolwich may be the lone cowboy in this town for 90% lending to first time buyers on new build for at least the foreseeable near future so get in whilst you can!
The big question is how creatively Bovis will use incentives in these contracts?!
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Anonymous | 9 Jun 2010 4:15 pm
Deja Vue? Given Builder's past pricing doesn't this really mean 100%LTV?
The RICS Red Book referring to Market Value states "This estimate specifically excludes an estimated price inflated or
deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangements, special considerations or concessions granted
by anyone associated with the sale, or any element of Special Value".
If this finance is only offered by Barclays through the Woolwich and the builders' brokers as some suggest how will Valuers reflect the atypical financing or any special considerations or concessions granted by anyone associated with the sale?
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Anonymous | 9 Jun 2010 5:26 pm
Given how some lenders have got their fingers burnt with new builds and builders inflating prices, I am surprised that Barclays is so keen to get into bed with a builder in the current climate where there is still a danger of a double dip on house prices.
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Anonymous | 9 Jun 2010 6:16 pm
Barclays have probably bought BMV insurance from Bovis worth about 10%. Barclays are probably passing around 2% through for lower rates on what is essentially an 80% LTV for them.
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Anonymous | 10 Jun 2010 12:31 pm
I agree with Anon/Deja Vue. It will be interesting to see whether the prices required for the new build homes reflect the possible risks involved here. If they are out of step with the rest of the market, will they get past the mortgage valuation unscathed?
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