January 14th, 2014
Natwest Bank has this week extended their Help to Buy proposition to allow business transactions from the intermediary market. Although the bank were the first to announce their support for the second phase of the scheme in October 2013, like many lenders they have been slow to widen the channels for business to be placed on these products.
The news follows on from product releases issued by Santander and the Post Office at the start of the month. The bank joins Halifax, the Lloyds Banking Group, Aldermore, HSBC and Virgin Money as the lenders of choice for any movers looking to apply for a loan via the Government backed mortgage guarantee scheme.
On the decision to push the proposition forward in 2014, Mark Bullard, the head of sales for Natwest Intermediary Solutions, said: “There has been a lot of anticipation about the introduction of mortgages to support the Help to Buy: mortgage guarantee scheme, so I am delighted that we now have these deals available to intermediaries. It’s a great way to kick off 2014 which promises to continue the market improvements seen in 2013.”
Although this is a positive step to offer a wider range of choices for buyers looking at the scheme, rates are still a potential issue, as Simon Butler of Contractor Mortgages Made Easy noted: “Natwest has introduced rates that are competitive with those offered by other lenders under the Help to Buy mortgage guarantee scheme, although savings are considerable if a buyer can save the additional 5% required for a 10% deposit.
“For instance, Natwest are offering a two year fixed rate at 4.99% under the scheme, where-as Skipton Building Society is currently providing a two year fixed at 3.99%, when a borrower holds a 10% deposit. It is great to see banks endorsing the scheme, but it would really help first time buyers to buy if the rates were reduced by around 0.5% across the board.”
Reports of an increase in market activity continue to be reported, with figures recorded from 2013 showing that property values have increased by an average of 7.5% for the UK. Much has been made by the Government of the impact that the Help to Buy scheme has had on this, and it is fair to say that the option has certainly added confidence for many prospective first time buyers.
Competition for property is now at such a level that market experts are reporting a sizable increase in the level of buyers offering on each property in the market. Countrywide have released a report that states on average 9.7 buyers were making offers on an individual property when it first entered the market at the end of 2013. This figure has increased from 8.7 buyers in a similar position, at the same time period in 2012.
Notably, and despite more and more people working past the age of 70 years, the deposit level required by first time buyers has doubled in every six year period since the early to mid- 1980’s. As the average age of a first time buyer also continues to escalate, this trend is unlikely to halt anytime soon.
Commenting on the findings, Countrywide’s chief executive, Grenville Turner said: ‘We expect the proportion of buyers aged between 25 and 44 to grow to encompass 87% of all first time buyers by 2023, up from 67% in 2003. The number of first time buyers aged 25 and under is expected to fall by a third due to increased levels of student debt and a greater proportion of younger people renting.
“Despite this, we still expect that one in 10 first time buyers in 2023 will be aged 25 and under and supported in the main by the Bank of Mum and Dad.”
Article By: Jon Shields, Media Executive at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager
Tel: 01489 555 080