The Deposit Unlock scheme is a mortgage indemnity scheme, developed by the Home Builders Federation, 17 of its members and insurance broker Gallagher Re, and aims to help borrowers secure a new build up to £330,000 in value with a deposit of five per cent.
The lender has introduced a range of products, including a two-year fixed with a rate of 3.5 per cent. There is also a five year fixed with a rate of 3.75 per cent available.
The mortgages will be initially available on certain plots in Northeast England via four house builders Barratt Developments, Bellway, Keepmoat and Vistry.
Newcastle Building Society announced at the start of this month that it would be the first lender to launch products as part of the scheme. Around 20 mortgage lenders are understood to be engaged in the project.
Newcastle Building Society’s chief customer officer Stuart Miller (pictured) said: “More than ever, we need to help provide more options for low-deposit borrowers looking to buy a new-build home. Deposit Unlock is a truly innovative initiative and we’re pleased to be the first lender to offer products under the scheme.”
BSA’s head of mortgage and housing policy Paul Broadhead said that the scheme would be particularly helpful for younger buyers, who can struggle to build up a deposit whilst simultaneously paying rent.
He said: “Our research shows that raising a deposit is now the single biggest barrier to would-be buyers. Building societies are synonymous with home ownership and it is good to see Newcastle Building Society leading the way as the first lender to sign up. I am confident that more will follow.”
Home Builders Federation executive chairman Stewart Baseley said that Deposit Unlock could be a more “sustainable solution” to help buyers on the property ladder as Help to Buy has become less accessible in some regional markets, especially in Northern England and is due to be wound up in 2023.
Gallagher Re’s managing partner of mortgage indemnity Steven Rance said: “With the insurance indemnities effectively funded by the house builder community, Newcastle quickly recognised this as a long-term, commercial and sustainable solution that would unlock the return of 95% loan-to-value mortgages in the new build space.
“And having worked closely with them during its development, we are delighted to see Newcastle now go live with its first product rates, bringing the scheme to fruition and spearheading the way for many other lenders to follow suit.”
Kate Davies, Executive director at the Intermediary Mortgage Lenders Association (IMLA), said: ““There are, of course, other providers developing innovative schemes aimed at providing an alternative to Help to Buy. IMLA is pleased to have been able to facilitate discussions between providers and members and we are delighted that one of our members – Newcastle Building Society – is the first to launch with Deposit Unlock. We wish it every success.”
She added: “It will be interesting to see how this launch encourages and stimulates other providers and lenders to continue to find creative solutions to the challenges faced by buyers. Growing competition in this area can only benefit consumers, as they seek products which fit their individual needs.”