The Government’s NewBuy scheme has just celebrated 6 months in existence having been introduced in April this year. The Scheme looks to support a difficult housing market. Since its launch the scheme has proved a huge success, with a number of lenders now offering 95% mortgages requiring modest deposits from as low as 5%. The new homes mortgages are potentially available up to a maximum purchase price £500,000.
There have been thousands of enquiries from potential new purchasers looking to get on the property ladder and according to developers a number of new reservations and sales are being completed through the assistance of the scheme.
The basis of the scheme has been to help people, unable to raise a significant deposit, to buy a new home in the difficult mortgage climate.
The scheme has been particularly targeted at first time buyers but also is available to existing homeowners who have limited deposit funds National mortgage lenders operating the scheme provide a 90 to 95% loan to value (LTV) mortgage for anyone meeting their NewBuy lending criteria. buyers meeting their qualifying criteria. There are 5 main lenders offering NewBuy mortgages and their particular criteria differs
Industry estimates indicate that over 50% of those taking out a NewBuy mortgage have done so using the maximum 95% loan available.
More than half of those who have so far borrowed successfully through NewBuy are thought to have taken out mortgages with the maximum 95% loan to value ratio.
One of the main objectives for NewBuy has to be to increase the supply of new housing. It is hoped this would occur through builders responding to the increased demand by increasing further house supply and in doing so create further jobs in the depressed construction industry
The Government has focused on the provision of new housing as a stimulus for economic growth and it has recently announced a further package of measures to further boost construction. These have included reducing the necessity for developers to build social housing as part of the development , Government guarantees for infrastructure projects, the reduction in planning restrictions and a further £280 million investment in the existing FirstBuy scheme.