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NewBuy: The housing industry response

by: Mortgage Solutions
  • 12/03/2012
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NewBuy: The housing industry response
The government’s NewBuy housing initiative has officially launched today, with Nationwide, Barclays and NatWest all confirming 95% LTV products.

Housing experts across the industry have given a largely positive welcome to the scheme.

However, some commentators have warned it is a short-term fix that could make things worse.

Paul Smee, CML director general:

“NewBuy mortgages will help creditworthy borrowers who simply haven’t yet managed to build up a large enough deposit to gain access to finance to buy a newly built home. NewBuy is good news for homebuyers and potentially good news for jobs and the wider economy too.”

Housing Minister Grant Shapps:

“We want to help everyone achieve their aspirations, and feel the pride of home ownership. I’m delighted that from today the NewBuy Guarantee will give thousands of prospective buyers the chance to buy a home with a fraction of the deposit normally required.”

Matt Hutchinson, director of flat and house share website Spareroom.co.uk:

“Any government assistance will be welcomed, but you do feel that this is simply scratching the surface of the problem, and until lenders across the board relax their lending criteria, it is going to continue to be an uphill struggle for first-time buyers.”

Miles Shipside, director of Rightmove:

“NewBuy helps address the challenge of raising a deposit and we’ve found that the knock-on effect is that, as of today, nearly two in five first-time buyers will be more likely to getting on the housing ladder thanks to this initiative.”

Jonathan Samuels, CEO, Dragonfly Property Finance:

“The NewBuy guarantee scheme, like many such schemes over the years, smacks of desperation. The property market will come back when it is ready to come back and schemes like this are merely tinkering around the edges.

“If the government thinks it will kick start the property market, then it is in cloud cuckoo land. If we are to have a strong property market in the long term, we should avoid quick fixes in the short term.”

Home Builders Federation executive chairman Stewart Baseley:

“The scheme will provide a vital kick-start for the house builders, large and small, which will be able to build the homes and create the jobs that the country desperately needs. The government deserves credit for backing NewBuy and enabling it to become a reality; it shows that housing is in its rightful place at the top of the political agenda.”

Andrew Baddeley-Chappell, head of mortgage strategy at Nationwide:

“The widening gap in housing provision is undisputed. NewBuy will boost the supply of properties, increase employment, and provide affordable mortgages to those with more modest deposits, including first-time buyers.”

Alastair Stewart, industry analyst at Collins Stewart:

“From a housebuyer’s point of view there is a very real chance of instant negative equity, since – if this is the only real source of 95% mortgages and it is only available on new homes, where volumes are near historic lows – there will be short-term upwards pressure on prices, which like buying a new car, will evaporate when the buyers put their keys in the lock.”

Andy Gray, head of mortgages for Barclays:

“We believe NewBuy this will boost housing market confidence and support the flow of new housing providing positive consequences for jobs and the economy as a whole.”

Moray McDonald, mortgages director at NatWest:

“We welcome the builders and government sharing the risk to make this initiative possible. We hope the increased demand it will create will help lift the economy via the construction of additional homes.”

Phil Cliff, mortgage director at Santander:

“Santander UK looks forward to continuing to support the UK housing market through this new initiative. We are in the final stages of agreeing partnerships with selected developers and will start to offer our first NewBuy mortgages via intermediaries with established ties to these house builders by the middle of the year.”

Charles Haresnape, managing director of Aldermore Residential Mortgages:

“Any initiative to make it easier for cash-strapped first-time buyers to get a foot on the first rung of the housing ladder has to be welcomed. It’s encouraging that seven leading UK house builders are supporting this scheme and I hope we see increasing number of lenders following suit.”

Henry Pryor, buying agent and housing commentator

“It’s easy to be cynical when you consider that the government is cancelling the first-time buyer Stamp Duty holiday. First-time buyers are clearly the target of this initiative and, as a result, there will be some who think this is just a sop to the construction industry.

“This is an interesting and exciting initiative to try and get houses being built again, but first-time buyers need to very careful that they will be able to afford the products, not just today, but in the long term.”

Grenville Turner, chief executive of Countrywide:

“The NewBuy mortgage indemnity scheme is a huge break-through for the new build sector. Most importantly, it addresses the biggest issue affecting house transactions – deposit affordability.

“However, with only three lenders signed up to the scheme at present, we hope the funding is in place to cope with the pent up demand in the market and that there are tight controls over how NewBuy mortgage products are priced to stop lenders charging a premium to offset any perceived risk.

“In addition, NewBuy is not a sticking plaster to replace the void in house sales that will be left by the Stamp Duty holiday.”

Robin King, director of Move with Us:

“Any help for the housing market is a good thing. However, historically, new homes have accounted for less than 15% of the whole market and have no established value, so why are we just supporting new homes?

“If the government wants to make a real difference to the property market, this scheme should be extended out to all home purchases. The vendor could pay the 3.5%, which is currently paid by the new home builder, into an account made available to the mortgage lender.”

 

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