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Eager borrowers refusing to wait for mortgage guarantee scheme, say brokers

  • 16/04/2021
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Eager borrowers refusing to wait for mortgage guarantee scheme, say brokers
Some borrowers have shown no interest in the incoming government-backed mortgage guarantee scheme and have been opting for 95 per cent loan to value (LTV) deals from other lenders, brokers have said.


So far, Halifax and Santander are the only banks to announce details of their offerings which go live next week. 

Other lenders are expected to launch their products over the next fortnight.

However, the lack of information in the six weeks since the scheme was announced has resulted in some brokers receiving little to no enquiries from borrowers who were ready to purchase. 

Nik Mair, director of London Mortgage Solutions, said borrowers were not willing to wait. 

“People are just going for what’s available now. Other lenders have come to market with 95 per cent LTVs so my clients have just been going for that.  

“It’s not as if they’re getting a preferential rate and all the standard criteria still applies,” he said.

Dina Bhudia, managing director and chief executive of P2M Asset Management, said while the scheme gave other lenders the confidence to return to the low market, she questioned whether it was needed as her clients were preferring to raise their equity instead. 

She said: “I’ve personally had no-one ask me about the mortgage guarantee. Probably because a lot of my cases are vanilla and people are resorting to the bank of mum and dad.  

So, they have larger than five per cent deposits. 

Christopher Hall, mortgage adviser at Mortgage Guardian, said it also came down to properties not fitting the criteria of the scheme as many first-time buyers were going for ineligible new-build properties.


Broker exclusion 

With borrowers seemingly showing no interest, Hall predicted this could be because they were planning to go directly to the banks once more details revealed as they felt comfortable approaching the household names. 

He said: “Perhaps this is a disadvantage for brokers as a lot of customers will know the main lenders subscribing to the scheme and go direct instead of through a broker. 

“I don’t think the publicity is so high for the other 95 per cent LTV products. It is on social media with the broker community, but I don’t think public awareness is quite well known.” 


Mortgage guarantee future 

Bhudia and Mair said the uncertainty of what the scheme might look like for mortgage holders in the future also made them unwilling to suggest it to borrowers without more information. 

Bhudia said she would rather wait to see the small print to work how it might affect borrowers 30 years down the line. 

Mair echoed these sentiments and said there was no point in telling a client to hold off if a property had been decided upon and other options were immediately accessible. 

“At least that way there’s no further complications about how it’s backed because we don’t have enough information and can only advise on the products that are available to us,” he added. 

Mitul Patel, mortgage adviser at Lemon Tree Financial, was also wary of the initiative. 

He said: “They’re commercial organisations at the end of the day and it still has to be beneficial for them. No one gives away something for nothing.” 


Managing expectations 

In contrast to other broker experiences, Mitul Patel, mortgage adviser at Lemon Tree Financial, noted that there was sustained interest in the scheme, with clients continually calling about it since the day after the announcement. 

He said he was spending time trying to calm them down and remind them there was not yet enough information. He also said certain clients seemed to have high expectations of what they would be able to borrow, with some looking at properties worth £750,000.

Patel added: “I think the messaging and the fact it was announced by the government made it sound appealing. So, I’ve tried to manage expectations and say be prepared to not qualify. 

“Some think it’s 95 per cent on anything they want to buy. A lot of people are looking forward to this. My advice is to let it settle down, see what comes out next week and see your options thereafter.” 



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