Reacting to the lender’s decision to launch mortgages at 95 per cent loan to value (LTV) without the cushion of the scheme, which was extended by a year earlier this week, some brokers said this was a good move.
Craig Fish, founder and director at Lodestone Mortgages and Protection, said it was a “positive signal” that first-time buyers were welcome.
He added: “If ever there was an indication that the mortgage market is open for business, this is it. Not only are Natwest sticking their head above the parapet, but they are also doing it in style by withdrawing from the government scheme that provides them with a guarantee.
“This is a clear indication to all that they have money to lend and that they don’t believe there will be too much of a slide in property prices.”
Take politics out of the property market
Lewis Shaw, owner and mortgage broker at Riverside Mortgages, said the decision was “unsurprising” as the scheme did “sod all in reality”.
From its launch in April 2021 up to June 2022, the mortgage guarantee scheme supported 24,153 completions worth £4.4bn. The scheme intended to restore confidence in high LTV lending when many had withdrawn from the market. At the time, it prompted some lenders to relaunch high LTV mortgages without backing from the government.
Shaw said the scheme was as unnecessary as the stamp duty holiday because the market did not need further stimulation coming out of lockdown.
He added: “Get politicians out of the mortgage and property markets altogether. Whilst they may mean well, it always causes further problems somewhere else in the food chain.”
Hidden downsides
Scott Taylor-Barr, financial adviser at Carl Summers Financial Services, hinted at the scheme not being as beneficial to lenders as it appeared.
Taylor-Barr said based on conversations he had with lenders, the scheme was expensive to be a part of which was why some decided to lend at 95 per cent LTV without it.
Now that it has been extended for an additional year, he said: “It would be interesting to know if the costs of being part of the scheme have increased, given the projections for property prices in 2023, or if some other conditions have been imposed that Natwest didn’t want to agree to.”
Fish said he feared for Natwest’s “already stretched service levels” and this was echoed by Matthew Jackson, director at Mint FS. He suggested that brokers would not recommend the lender despite its re-entry because of its current service.
Jackson added: “Like a lot of things Natwest have done recently such as continuing to offer products with a six-week wait for a case to be looked at, this does not really make any sense.”
He said the move was good for PR as despite being similarly priced to its competitors, it showed they were “a lender who supports first time buyers and home movers with small deposits”.
