Lenders have increased the rates on products they developed for the government’s indemnity guarantee scheme less than two months after its launch.
Under the NewBuy scheme, which launched in March, lenders offer 95% loan-to-value mortgages on new-build properties against a mortgage indemnity guarantee funded jointly by builders and the government up to 9% of the property value.
At the scheme’s launch, NatWest, Barclays and Nationwide Building Society launched specific products for the scheme. But since then, all three have made changes to these products.
NatWest has increased the rate on its products by 0.5%, meaning it now offers a two-year fixed at 4.79% and five-year fixed at 5.49%.
Nationwide has increased its three and five-year fixes by 0.2% and 0.1% respectively, meaning it now offers a 5.89% three-year fixed and 6.09% five-year fixed.
Barclays has replaced its 4.99% two-year fixed rate and 5.89% four-year fixed with a 6.09% three-year fixed.
NatWest only distributes its NewBuy mortgages direct, Barclays will distribute both through intermediaries and direct while Nationwide only distributes through intermediaries.
Last month, Halifax launched a two-year fix at 5.99% and another at 6.39% which is fee-free.
Dominik Lipnicki , director at Your Mortgage Decisions, says: “It is taking advantage of people who have small deposits. It means fewer people will be able to afford to take out the mortgage, when the point of the scheme was to ensure more could.”