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Lenders may not be ready for MIG launch next Monday

There are fears that mortgage lenders will not be ready for the launch of the  government’s NewBuy Guarantee scheme on Monday.

Under the scheme, announced in the government’s housing strategy last November, lenders will offer 95% LTV mortgages for new-build properties against a mortgage indemnity guarantee funded jointly by house builders and the government.

The rate charged for the mortgage is meant to be lower than the ones currently on offer for a 95% LTV mortgage.

Reports in today’s Financial Times suggest lenders are not willing to price their deals below 5%, which is causing delays because builders are keen for them to offer lower rates.  

This has led to fears that although a number of lenders are supporting the scheme in principle, they will not have the products in place for Monday.

A spokeswoman for the Council of Mortgage Lenders, which has developed the scheme in conjunction with the Home Builders Federation, says it will not be commenting on the initiative until its official launch on Monday.

It cannot give any specifics about how many lenders have signed up to the initiative, but the spokeswoman says a number of lenders are working towards participating in it.

However, a spokesman for HSBC, tells Mortgage Strategy: “We will not be launching any products on Monday and are still considering our position regarding the scheme. We have no definitive plans and are still in the process of seeing how we can work with it.”

Nationwide, Royal Bank of Scotland and Barclays could not confirm whether they would be ready to launch any products on Monday but say they are supporters of the scheme.

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