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Three lenders launch MIG scheme mortgages

NatWest, Nationwide and Barclays have today launched products for the government’s NewBuy Guarantee scheme.

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.

NatWest is offering a two-year fix at 4.29% at 95% LTV with a £499 fee, and a five-year fix at 4.99% at 95% LTV with a £499 fee. Its deals are only available direct and not via brokers.

Barclays is offering a two-year fix at 4.99% and a four-year fix at 5.89%, both of which comes with a £499 application fee. The bank says the products will primarily be sold via intermediaries but will also be available direct.

Nationwide is launching a three-year fix at 5.69% with a £900 product fee and a £99 booking fee, while first-time buyers will receive a £500 product fee discount.

The building society is also offering a five-year fix at 5.99% with the same fees. It says the rates match those currently available for customers purchasing second hand property at 90% LTV.

Nationwide says its deals will initially only be available via intermediaries, and it plans to make them available direct at a later date.

The Council of Mortgage Lenders says while just three lenders have launched products today, it looks foward to other lenders, including Halifax and Santander, joining the scheme over the coming months.

Santander has today confimed that it will be participating in the scheme and that it will launch its products by the middle of the year. The lender says it is in the final stages of agreeing partnerships with selected developers and will offer its NewBuy mortgages via intermediaries with established ties to these builders.

Moray McDonald, mortgages director at NatWest, says: “We welcome the builders and government sharing the risk to make this initiative possible. We hope the increased demand it will create will help lift the economy via the construction of additional homes.

“We have maintained 90% LTV lending for second hand homes continuously since the financial crisis. NewBuy allows us to now extend 90%-95% loans to new home buyers, backed by strong promotional rates.”

Andy Gray, head of mortgages at Barclays, says the lender is pleased to be one of the first to launch products under the scheme.

He adds: “We believe this will boost housing market confidence and support the flow of new housing providing positive consequences for jobs and the economy as a whole. The mortgages we have launched today give buyers a really attractive rate, and strike the right balance for Barclays and builders to offer 95% LTV mortgages in a sustainable way.”

Paul Smee, director-general of the Council of Mortgage Lenders, says: “NewBuy mortgages will help creditworthy borrowers who simply haven’t yet managed to build up a large enough deposit to gain access to finance to buy a newly built home.”

He adds: “Borrowers need to understand the implications of high LTV borrowing, so we will be supporting the initiative with clear consumer information to help people decide whether NewBuy borrowing is an attractive option for them.”

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  • Anon 13th March 2012 at 12:06 am

    The scheme amounts to state aid for big lenders and builders. The detail reveals a cobbled together scheme that lacks thought which could also be said of most government legislation at present.

  • peter stimson 12th March 2012 at 11:16 am

    The rates and the lack of lenders reflects the nervousness of the banks to participate in this

    Whilst on the positive side you have MIG underwriting the loan down to 85% LTV, you have some worrying issues:-

    – It’s new build!
    – With just three lenders, how do you avoid the risk of lender concentration on certain developments
    – How do you stop builders starting to ‘profiteer’ once they know that FTB’s can actually now get funding – comparables are very difficult on new developments
    – what happens after the 3 years when the MIG funding is withdrawn – do you creae a price spike then a subsequent fall?

    Before i am accussed of being overally negative, the scheme has merits in that it is at least trying to tackle the deposit issue. However its limited and temporay nature are casusing issues. What is needed is something more akin to the NHG scheme in Holland whereby a quasi government body provides MIG insurance to borrowers who, based on age, income and circumstances, qualify. It isn’t new build specific limited, it is about getting people into the housing market who otherwise might struggle http://www.nhg.nl