A letter written by Home Builders Federation (HBF) executive chairman Stewart Baseley has revealed that banks are not playing ball with the Government’s 95% mortgage offer to kick-start the housing market.
The letter dated 27 March – leaked to the Daily Telegraph – informed housebuilders that lenders have not “embraced the scheme as first envisaged” and that efforts were under way to “impress upon them to implement NewBuy as a matter of priority.”
The scheme, which was launched this month, was meant to be rolled out rapidly following the launch with lenders engaging builders about the product.
The NewBuy scheme is supposed to enable people to borrow up to 95% of the value of new homes, reducing the deposit to just 5% – £10,000 for a home worth £200,000. The mortgages are being back by housebuilders and the Government.
However, the letter reveals that while seven major housebuilders and three banks – RBS, Nationwide and Barclays/Woolwich – were ready on the launch date, the rapid uptake that was intended has stalled.
The HBF had given the Council of Mortgage Lenders (CML) a list of 130 smaller housebuilders to pass on to the lenders.
They were supposed to contact the builders about offering the product through so-called “cells”, or bundles, of NewBuy mortgages offered by the lenders.
However, only one lender, Nationwide, is close to launching this type of cell, the letter reveals.
The letter said…”it has become increasingly clear over the past week or so that very few home builders have heard from any of the lenders to date”.
It said those lenders already signed up to the scheme were “clearly waiting for Lloyds to enter the field, given its sizeable market share in the new build mortgage market”. It added: “We understand Lloyds is currently scheduled to launch on 16 April. (We understand Santander will not be ready to launch until May.)”.
It said: “A range of other concerns have been mentioned to us, including lenders still deliberating about the ground rules for entry into their ‘Multi User Cells’, and what approval processes they will have, despite these being discussed extensively and, we believe, agreed with all parties.”
The letter said the Treasury and other senior Government officials will make “urgent contact” with the lenders at senior level to establish each lender’s intentions and to “impress upon each the need to implement NewBuy as a matter of priority and to establish MUCs”.
A joint CML and HBF statement said: “The challenges involved in implementing NewBuy to a very demanding timetable have been considerable, but the CML and lenders are working with the HBF, builders and the government to roll it out more widely to a range of additional builders. It is less than three weeks since the initial launch, but we recognise that a number of builders are keen to participate as soon as possible. We are confident that the range of participants will grow substantially over the coming weeks and months.”
Repost from 24hrdash.com