How to build a first-time buyer strategy – Nationwide

by: Andrew Baddeley-Chappell
  • 16/10/2012
  • 0
How to build a first-time buyer strategy – Nationwide
It is clear that the Funding for Lending Scheme is an important first step in opening up the mortgage market.

It creates the certainty that the market has capacity to support and grow lending levels – new lending need not be at the expense of existing markets.

With funding concerns eased in the medium term, there can be a greater focus away from lending solutions and towards a wider message that lenders are open for business. This must be in ways that consumers understand.

One straightforward way to show the market as open is to highlight the availability of 95% LTV mortgages. Since the 1930s (including the last economic downturn) such mortgages have been an integral part of the mortgage landscape and their general return would send a stronger message than any new government scheme that the market is open for business.

Lending should be made responsibly, and borrowers should be mindful of the ongoing economic fragility, but this kind of lending can and should exist, even in these constrained economic conditions. Smaller deposit schemes already exist for example through First Buy and Lend a Hand Schemes.

NewBuy also provides funding up to 95% but gaps remain between where many lenders have stopped and the scheme starts. These schemes all use a third party for support.

Nationwide’s own Save to Buy scheme requires no third party but does require the borrower to demonstrate an ability to save regularly. More importantly it requires the borrower to think about the mortgage before thinking about the property.

Nationwide also lends to 95% loan-to-value to existing customers. For these customers we have the strongest possible experience of their history of managing regular payments.

So the plan looks like this. Firstly fill in the gaps in the NewBuy scheme and keep working with builders to expand its take up. More builders, more lenders and more options to use – e.g. part exchange.

Secondly look to all active mainstream lenders to provide 95% loan-to-value products for good quality first time buyers and to their good quality existing customers.

Deliver both of these and we have a simple message that the market is open for business again.

Andrew Baddeley-Chappell is head of specialist lending and divisional policy and governance at Nationwide

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