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HBF Briefing: Help to Buy, NewBuy, Funding for Lending

Date: 24/04/13

Help to Buy, NewBuy, Funding for Lending

HBF Updates

Help to Buy: Equity Loan Scheme

The HCA has advised that Help to Buy: Equity Loan contract terms will now specify a maximum six months from exchange to legal completion. Initially this had been restricted to three months. HBF had made representations to the HCA to extend the period to six months, so this will be very welcome news to HBF members involved in the scheme.

NewBuy: Incentives

I am also very pleased to advise that some lenders are now willing to allow a limited range of non-financial incentives under the NewBuy scheme. Previously incentives were limited to carpets & curtains and straight discounts. Please click here to view the CML note on the new rules, including a list of incentives acceptable to each of the six NewBuy lenders. HBF had made strong representations to the CML and lenders to allow a more flexible approach to incentives.

Funding for Lending Scheme Extension

The Treasury and Bank of England this morning announced that the Funding for Lending Scheme (FLS) is to be extended by a further year to January 2015. This is very welcome – HBF had called for an extension in our Budget Submission - as some lenders had expressed concern that the withdrawal of FLS in January 2014 could push up their funding costs from late 2013, which could have led to higher mortgage rates. The FLS has yet to have any measurable impact on net mortgage lending, but everyone agrees it has helped reduce mortgage rates.

The FLS has also been modified to increase the incentives for banks to lend to SMEs. FLS funding is not directly channelled into any particular area of lending. Rather it provides banks and building societies with access to low cost funding. Any actual lending, such as to SMEs, is entirely in the hand of the lenders who will, as always, make appropriate commercial decisions on a case-by-case basis.

John Stewart
Director of Economic Affairs


Download CML guidance note

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