This is an important move that will give customers the opportunity to buy or remortgage their homes.
The first question we are being asked is why now? The answer is simple and reflects the actions of the Government and HM Treasury; September’s announcement by Prime Minister David Cameron to bring forward the second phase of the scheme meant that we decided to accelerate our own rollout too.
Aldermore is committed to supporting the initiative and we had stated previously that we would introduce our products as soon as we could bring them to market. Now that we are in that position, we have been able to expedite our offering to 16 December 2013.
This will make us only the third lender to offer via brokers and only the second to offer remortgages. We have taken the decision to offer remortgages as we want to continue supporting creditworthy customers looking to improve their homes by allowing them to withdraw equity as necessary.
Additionally, we have increased the loan to value ratios on our standard products from 80% to 85%. This means our Help to Buy product range is offered at an LTV of between 85.01% and 95%. It will of course have no impact on our current criteria for assessing potential customers, which is based on affordability.
And my thoughts on whether the scheme will work? I very much expect to continue seeing the current improvements in the housing market over the coming year. The question is whether this will force the Government, with an election 18 months away, to change the scheme as it progresses.
I do not expect the property market to overheat given the improving supply, strict lender checks on affordability and the fact that much of the UK has only seen modest house price increases so far. In the event this does happen, the Government can make adjustments to the scheme or withdraw before the three-year proposed term.
Aldermore launched its first Help to Buy range today.
Charles Haresnape is managing director of residential mortgages at Aldermore Bank
