Four brands from the two state-backed lenders, RBS and Natwest and Lloyds-owned Halifax for Intermediaries and Bank of Scotland have confirmed they will launch Help to Buy phase two mortgages to 95% shortly.
However, lenders will not confirm they will launch to the government’s timetable of next week.
Coinciding with David Cameron’s shock announcement on the weekend the government will bring forward the mortgage guarantee part of Help to Buy shortly, lending trade body the Council of Mortgage Lenders released briefing notes to lenders on the scheme on Friday.
Lenders will be expected to launch products but apply for the guarantee three months later from 2 January 2014.
However, data on capital relief ratios and other elements of the scheme are still unclear, with the CML briefing including sections in italics denoting known unknowns.
According to sources, the cost to lenders of the government guarantee will start at 30 basis points for the 80 to 85% loan-to-value (LTV) bracket, although this may change, 40 basis points at 85% to 90% and 90 basis points at 90 to 95% Loan to Value. The government will review its fees each year and lenders must notify the government if they wish to participate and the LTV bands they choose to lend in.
One lender said the likely market impact of the fees could make Help to Buy rates more competitive by 0.3-0.4% from the January launch when the bulk of UK lenders may start joining the scheme.
The CML’s lender briefing passed to Mortgage Solutions confirmed UKAR, the same lender administrating toxic loans stripped out of the bailed out banks, will audit all lenders signed up to the scheme at least once a year or more if there are concerns.
Lenders will also have to report to an agreed template on individual loans each month, with each given a unique identifier number allowing UKAR to administrate the Help to Buy loans more easily.
With the imminent launch of Help to Buy 2, products lent under the scheme are no longer expected to be Mortgage Market Review-compliant ahead of time, if affordability, stress-testing and income have all been checked.
On capital relief, lenders using either the internal ratings and standardised-based approach will be able to apply for capital relief, although again, the fine detail is yet to be released.
Mortgage advisers and networks were also caught off-guard by the Help to Buy move over the weekend, confirmed LSL mortgage boss David Copland.
