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Governments flag bearing housing scheme is already being questioned as the rates of mortgages being offered are being seen as not affordable (11 April 2012)

Date: 11/04/2012
Duncan Lewis, Legal News Solicitors, Governments flag bearing housing scheme is already being questioned as the rates of mortgages being offered are being seen as not affordable

Britain’s biggest house builder has raised concern that the mortgage lenders were discouraging the government’s flagship housing scheme by charging excessively steep rates.
Prime Minister David Cameron had launched the NewBuy Guarantee scheme last month which is underwritten by 95 per cent loan to value mortgages by the government and the builder on new build homes.
The scheme was aimed at kick starting the housing market and helps boost the economy but it seems that the banks and building societies involved were pricing products
The aim is to boost the economy and kickstart the housing market, but there are growing concerns that the banks and building societies involved are pricing products without compromising for the scheme to take off.
Mike Farley, Persimmon's chief executive said the concept was right and the demand was there but the rates were really pouring water over the scheme. The rates by the mortgage lenders were anywhere around 6pc which were not affordable.
Mr Farley called for lower rates and more entrants to the market as his comments came after the latest lender Halifax, launched NewBuy products with rates at about 6pc.
Meanwhile, NatWest and Barclays, two of the other three lenders backing the scheme, have already raised their NewBuy rates from what was offered at the launch. NatWest said its initial rates were promotional while Barclays said it had acted in response to demand.
Roger Humber of the House Builders Association said the scheme was beginning to look as an embarrassing thing for the Government.
The NewBuy scheme is already being questioned where the Home Builders Federation, which helped to develop the scheme, stating that it was not what was originally planned.
A spokesman for the Council of Mortgage Lenders said the rates are "not unattractive" for 95pc loan-to-value mortgages and that, although indemnity protects lenders, their pricing still has to reflect the risks involved.

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