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Media

10 September, 2012

The 95% mortgage is back!

NewBuy hits 1300 reservations- and is ramping up.

NewBuy, the scheme that enables home buyers to purchase a brand new home with as little as 5% deposit has broken through the 1300 reservations mark - and six months on from launch is starting to really take off.

At launch it had seven builders and four lenders on board. There are now over 30 builders selling homes using NewBuy and this week a sixth lender, Aldermore, announced it is offering NewBuy mortgages.

The Government-backed scheme aims to help people wanting to buy a home who haven’t got the large deposits that lenders have been requiring. It can be used by first time buyers or second steppers without enough equity in their current home to move on.

Take up of NewBuy has been broadly in line with the successful shared equity scheme FirstBuy, which itself was allocated more money last week by Government. However, with more developers now on board, and with all the lenders having recently dropped their NewBuy interest rates, take up of the scheme is expected to continue to increase.

90-95% mortgages were the norm for first-time buyers for nearly three decades before the economic crisis and subsequent credit crunch hit in 2007. Since then they have all but disappeared from the market, leaving many wannabe home buyers unable to realise their dream of home ownership.

The level of interest in NewBuy is demonstrated by the fact that the web site www.Newbuy.org.uk will this week have its 100,000th unique visitor. The Scottish and Welsh Governments are developing their own schemes and believe they will be equally as popular as NewBuy. MI New Home (www.minewhome.co.uk) will launch shortly in Scotland, whilst HBF is working with the Welsh Government to develop a scheme following its commitment to do so in a recent White Paper.

Speaking today, Stewart Baseley, Executive chairman at HBF, which proposed and developed the scheme with the Council of Mortgage Lenders, said; We are now starting to gain some real momentum and with more and more builders and lenders coming on board are confident NewBuy will make a real difference.

“We know people want to buy, but many have been thwarted by the current large  deposit requirements. NewBuy is proving a lifeline for people as it allows them to buy their dream home with a 5% deposit. Many NewBuy first-time buyers had been trying to save a deposit while staying at home with their parents or living in rented accommodation. Other buyers have been home owners stuck in a house no longer big enough for their growing family. NewBuy is proving a real winner for them after such a frustrating time.” 

NewBuy protects lenders against losses arising from default. It is paid for by house builders and guaranteed by Government. It was the key announcement in last autumn’s Housing Strategy before being launched in March this year. NewBuy buyers are subject to the lenders’ usual stringent affordability and credit requirements to ensure they are able to take on a 95% mortgage.

For more info visit www.newbuy.org.uk 

For media enquiries, or to arrange an interview, please contact Steve Turner on 020 7960 1606 / 07919 307 760 or steve.turner@hbf.co.uk

We have a number of case studies with pics available for media use

Notes to Editors:

  1. The Home Builders Federation (HBF) is the representative body of the home building industry in England and Wales. HBF’s members account for some 80% of all new homes built in England and Wales in any one year, and include companies of all sizes, ranging from multi-national, household names through regionally based businesses to small local companies: www.hbf.co.uk
  2. NewBuy details:
    • NewBuy is the Government backed ‘mortgage indemnity’ scheme that aims to help people with smaller deposits buy a new build home. It was launched in March this year. At launch thousands of people expressed an interest in using NewBuy and the number of reservations and sales is now rising steadily
    • The scheme was developed to help the many people who in recent years have          been unable to buy their first new home, or move house, because of the large deposits required to secure a mortgage in today’s difficult market.
    • NewBuy overcomes this so called ‘deposit gap’ by allowing them to get a mortgage with a minimum 5% deposit.
    • It is aimed at first-time buyers and those who already own a home who only have funds for a 5-10% deposit on the home they wish to buy. The lenders participating in the scheme will provide a 90-95% loan-to-value mortgage for buyers meeting their qualifying criteria.
    • At present Barclays, Halifax, Nat West, Santander, Nationwide and Aldermore are offering NewBuy mortgages. There are now many house builders operating the scheme and they have each joined forces with one of these lenders to offer NewBuy.
    • NewBuy is available in England on all the properties offered by home builders participating in the scheme up to and including a sale price of £500,000.  Separate schemes are currently being developed in Scotland and Wales.
    • For more info go to www.newbuy.org.uk
  3. MI New Home is being developed by the Scottish Government and www.homesforscotland.com