Regional lenders key to affordable housing progress

Small regional mutuals can play an important role in supporting the government’s HomeBuy initiative


During a recent National Housing Federation conference on shared ownership, there was a debate about how best we can increase competition within the affordable housing sector.

One of the points made was that we need more engagement with regional lenders.

This was interesting, as since the turn of the year we have been promoting the benefits of the government’s HomeBuy initiative to several regional building societies. We feel HomeBuy is a product that fits particularly well within the mutual sector.

The whole ethos of HomeBuy schemes is to promote sustainable home ownership for first-time buyers.

This goes hand-in-hand with regional societies’ aims of assisting local people to buy homes.

With this in mind, we are pleased to see that in the East Midlands Melton Mowbray Building Society is now supporting our HomeBuy Direct equity loan scheme, with no deposit required.

This is an excellent example of the Homes and Communities Agency working with lenders to assist first-time buyers purchase high quality new homes.

Our work continues to gather pace and we enjoy excellent relationships with national lenders such as Lloyds Banking Group, Nationwide, Barclays, HSBC and the Royal Bank of Scotland, all of which have been major supporters of HomeBuy Direct.

Santander, which is a supporter of our NewBuild HomeBuy shared ownership scheme, recently increased the maximum LTV to 90% for first-time buyers buying new-build properties.

We are speaking to several mutuals with the aim of creating a competitive market for low-cost housing

Santander’s move has a direct implication for customers who are purchasing through NewBuild HomeBuy as there has been limited mortgage product availability in the 90% LTV market over the past couple of years.

The measure is welcome and we are talking to other lenders that we hope will follow suit.

As smaller mutuals tend to manually underwrite mortgages, the additional work involved in assessing and granting low-cost home ownership mortgages does not affect their processes in quite the same way as it does those of bigger national lenders.

The latter tend to have automated credit and processing systems that were not originally designed with low-cost home ownership in mind.

Sometimes regional lenders will also have underwriters who personally know the development or even the property being offered as security, and can literally kick the walls if necessary so that they can be comfortable with the proposed risk.

We are speaking to several mutuals. Our aim is create a more competitive marketplace for low-cost home ownership.

We are aware that, with funding and capital requirements still a problem and consolidation being seen by some as a means of survival, it is still a tough marketplace.

But as more lenders consider supporting the government’s HomeBuy schemes and confidence surrounding the new-build sector returns, we will continue our work with lenders, registered social landlords and developers so that we can provide the means for individuals to purchase a new home that otherwise would have remained out of their reach.