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IMLA: Mortgages outside government 95 per cent scheme may be ‘better value’

  • 19/04/2021
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IMLA: Mortgages outside government 95 per cent scheme may be ‘better value’
The Intermediary Mortgage Lenders Association (IMLA) has welcomed the launch of the government’s mortgage guarantee scheme but highlighted that products offered outside it could prove “better value for borrowers”.


The government’s scheme went live today with Halifax, Barclays, HSBC and NatWest launching their 95 per cent loan to value (LTV) offerings – although NatWest’s range is only available direct from the lender.

Santander’s products go live tomorrow while Virgin Money will add a set of deals next month.

However, several lenders including Accord, Bank of Ireland, Skipton Building Society and Atom Bank have already unveiled offerings independent of the government scheme.

IMLA executive director Kate Davies (pictured) noted the guarantee scheme had clearly given lenders more confidence to return to this part of the market, but prices may not be comparable.

“We will need to wait to see how borrowers respond this time around,” she said.

“Price will clearly be a factor – and many of the non-government-backed 95 per cent products which have recently been launched may well represent better value for borrowers.

“There is a big role here for intermediaries to demonstrate their expert knowledge of the market and steer borrowers towards suitable and affordable products.”

At present it appears lenders are coalescing around interest rates of four per cent for their two-year fixes, with five-year versions slightly higher.

However, this may change as lenders start to compete for business.


Scheme drawbacks

Davies also noted there were some significant drawbacks to the scheme and so it was not a surprise some lenders had chosen not to use it.

“Many may be surprised to see that just a few lenders have said they will offer these mortgages and that some of those who have signed up have made it clear that their products will not be available for new-build properties,” she said.

“The scheme excludes applicants who have any form of credit impairment, and also lenders who securitise loans.

“When these factors are added to the additional costs associated with the scheme, many lenders are preferring to offer their own 95 per cent loan to value mortgages.”



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