Newbuy scam scheme in turmoil

brit1234

NewBuy mortgage scheme comes under fire

Lenders have been accused of undermining one of the Government’s flagship housing schemes by charging excessively steep rates on NewBuy mortgages.

:eek:

The accusation has come from Mike Farley, chief executive of Persimmon Homes, which has just announced that weekly sales are up 20% on a year ago.

Under the NewBuy Guarantee, taxpayers and the builder underwrite the 95% NewBuild mortgages, available to both first-time buyers and home-movers purchasing new homes worth up to £500,000.

But there are accusations that lenders are pricing products too high to allow the scheme to take off.

Farley said: “The concept is right and the demand is there. What is hindering its take-off is the rates.

“We are finding the affordability is not right because the rates they [lenders] have launched at are around 6%.”

Farley called for lower rates and more entrants to the market. Halifax last week became the fourth – and most expensive – lender to enter the NewBuy arena. Its products are two-year fixes at 5.99% with a £999 fee, and another with a 6.39% rate.

Meanwhile, NatWest and Barclays, two of the three original lenders backing the scheme, have raised their NewBuy rates from those on offer at launch. NatWest said its initial rates of 4.29% and 4.99% were promotional. It is now charging 4.79% for a two-year fix and 5.49% for a five-year fix, both with a £499 fee.

Roger Humber, of the House Builders Association, said the scheme “is beginning to look as if it could be very embarrassing” for the Government. Humber had earlier criticised the scheme as unfair to smaller builders, and said that questions could be raised about the ‘propriety’ of the Government providing indemnities “exclusively for the benefit of a few larger builders”.

According to the Daily Telegraph, the Home Builders Federation, which helped develop the scheme, has said in a letter that it is “not at all what was envisaged”.

http://www.introducertoday.co.uk/news_features/newbuy-mortgage-scheme-comes-under-fire

Strange how the builders are blaming the banks for the scheme not being affordable and not their high asking prices.:rotfl:

pqrdef

The banks and the government deserve each other, because it's now impossible to trust either of them as far as you could throw them.

But this scheme deserves to die.

Conrad

Whenever Government launches an iniative like this, they never come talk to people like me at the coal face, instead relying on experts and Bank heads in the design phase, which is akin to asking a WW1 General in 1914 for an effective battle plan (written far away from the trenches, and thus utterly useless).

I knew this would be a farce, and I wont deal with enquiries as they are a waste of my time as the scheme attracts those who are a bit hard up, and it is they who are the least able to pass the affordability tests on the mortgages.


As to the high rates, lender reps that I meet tell me this is because the delinquency rates on past affordable / shared equity schemes have been very high.


Nothing is going to improve until and unless the FSA water down thier overly tight lending rules which cause millions to find themselves locked out of home onwership even though the vast majority of them in past sustained a mortgage perfectly well.

brit1234

For a 1 bed London Newbuy Property (£250k) you are talking about £1600 a month mortgage.

The high property cost, low deposit and reasonably high interest rate makes the scheme crippling. This is before interest rates go up.

shortchanged_2

Farley said: “The concept is right and the demand is there. What is hindering its take-off is the rates.

Eh no. The concept is pants and if people can't afford to buy with interest rates at 6% then obviously the houses are too expensive because these rates are not particularly high by historical standards. So how would they cope with any potential further rate rises?.

Graham_Devon

Love how the demand is there, but it isn't, as the rates are too high. Brilliant.

heathcote123

brit1234 wrote: »

Strange how the builders are blaming the banks for the scheme not being affordable and not their high asking prices.:rotfl:

hmm not sure how you get sales up by 20%=turmoil.

Are high mortgage rates specific to newbuy, or ftb's in general?

vulcan1964

The main problem also with the scheme will come in two years time, when the FTB tries to remortgage. The properties will still be in negagative equity and the owners will be tied to the lender for years.

The lenders response "we will look at the situation at that time". If you were a FTB would you want to risk a unknown rate or rising SVR in two years?

From Conrad "vast majority of them in past sustained a mortgage perfectly well"

But this is now, with a euro economic crash coming, future house market uncentanty, would you lend a FTB any money on this scheme?

HAMISH_MCTAVISH

The Home Builders Federation, which helped develop the scheme, has said in a letter that it is “not at all what was envisaged”.

Well obviously.

What was envisaged was a scheme where people with a normal 5% to 10% deposit could get a mortgage without punitively high rates.

Because the indemnity guarantee meant the banks no longer had to withhold more capital for such a loan.

As usual however, the banks have managed to sabotage it with their greedy profiteering, and are only offering similar margins above base that they would without the scheme for a similar deposit.

shortchanged_2

HAMISH_MCTAVISH wrote: »

Well obviously.

What was envisaged was a scheme where people with a normal 5% to 10% deposit could get a mortgage without punitively high rates.

Because the indemnity guarantee meant they no longer had to withhold more capital for such a loan.

As usual however, the banks have managed to sabotage it with their greedy profiteering, and are only offering similar margins above base that they would without the scheme for a similar deposit.

Well lets face it Hamish it was a hair brained scheme that had no legs from the start.

It's looking like the banks are fed up with builders trying to sell their newbuilds at vastly inflated, over market price.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Well obviously.

What was envisaged was a scheme where people with a normal 5% to 10% deposit could get a mortgage without punitively high rates.

Because the indemnity guarantee meant the banks no longer had to withhold more capital for such a loan.

As usual however, the banks have managed to sabotage it with their greedy profiteering, and are only offering similar margins above base that they would without the scheme for a similar deposit.

Ouch... You are getting bitter these days Hamish!