Not all of the UK's leading building societies arecommitted fans of the UK government's flagship Help To Buy mortgage scheme.The Nationwide and Coventry building societies have admitted that they have no plans to sign up to the initiative. The Help to Buy scheme is a government-backed initiative designed to help prospective homebuyers to purchase their first home even if they have no more than a 5 per cent deposit; a sum that would currently exclude them from many of the mortgage deals available from the mainstream banks and building societies.
The Nationwide, one of the UK's largest mortgage lenders, has reported that it can fund 95 per cent mortgages more cheaply from its own resources than signing up to the government scheme, which has associated costs for the building society. It is the first of the UK's €big six' lenders to reject participation in the Help to Buy programme.
Lloyds Banking Group, Royal Bank of Scotland, HSBC, Santander and Barclays allprovidehome loansvia the government scheme but Nationwide and Coventry, the UK's third largest building society, say they will not participate in the scheme aimed at offering improved access to house buyers will only small deposits; the reason being that they already offer 95 per cent mortgages and are very active in providing them to borrowers with a 5 per cent deposit. Coventry building society has a strong capital position, so can do this without the need for the government schemewhich explains why they have no current plans to join.
According to a Treasury spokesman, currently over 65 per cent of the mortgage market lenders in the UK have committed to the initiative but Help to Buy is a voluntary scheme so the decision to participate is purely a commercial decision that must be taken byeach individual lender.
The Building Societies Association has welcomed the government's aims of encouraginglenders to approve mortgages for borrowers with smaller deposits. This has been an area of concern for some time and has prevented many young first time buyers from being able to buy their own home. However, although high street banks have not typically offered 95 per cent loans for the last few years some of the mainstream building societies have been offering high loan to value mortgages for some time. Because building societies are already lending at high loan to values then they clearlyfeel they have less need for the guarantee provided by the government scheme. This is particularly true if they can offer loans outside the scheme that are cheaper for the consumer.
According to a London mortgage broker the cost of the Help to Buy scheme will not make it financially viable for all lenders to participate. Smaller lenders in particular may be able to offer large mortgages funded from their own resources rather than paying the Treasury for the guarantee they offer under the Help to Buy scheme. All the better if this offers home buyers a wider range of choices as well as providing less expensive mortgage deals.
The Nationwide, one of the UK's largest mortgage lenders, has reported that it can fund 95 per cent mortgages more cheaply from its own resources than signing up to the government scheme, which has associated costs for the building society. It is the first of the UK's €big six' lenders to reject participation in the Help to Buy programme.
Lloyds Banking Group, Royal Bank of Scotland, HSBC, Santander and Barclays allprovidehome loansvia the government scheme but Nationwide and Coventry, the UK's third largest building society, say they will not participate in the scheme aimed at offering improved access to house buyers will only small deposits; the reason being that they already offer 95 per cent mortgages and are very active in providing them to borrowers with a 5 per cent deposit. Coventry building society has a strong capital position, so can do this without the need for the government schemewhich explains why they have no current plans to join.
According to a Treasury spokesman, currently over 65 per cent of the mortgage market lenders in the UK have committed to the initiative but Help to Buy is a voluntary scheme so the decision to participate is purely a commercial decision that must be taken byeach individual lender.
The Building Societies Association has welcomed the government's aims of encouraginglenders to approve mortgages for borrowers with smaller deposits. This has been an area of concern for some time and has prevented many young first time buyers from being able to buy their own home. However, although high street banks have not typically offered 95 per cent loans for the last few years some of the mainstream building societies have been offering high loan to value mortgages for some time. Because building societies are already lending at high loan to values then they clearlyfeel they have less need for the guarantee provided by the government scheme. This is particularly true if they can offer loans outside the scheme that are cheaper for the consumer.
According to a London mortgage broker the cost of the Help to Buy scheme will not make it financially viable for all lenders to participate. Smaller lenders in particular may be able to offer large mortgages funded from their own resources rather than paying the Treasury for the guarantee they offer under the Help to Buy scheme. All the better if this offers home buyers a wider range of choices as well as providing less expensive mortgage deals.