Government reveals MIG scheme lenders
The Government has revealed the names of the lenders that have signed up to its indemnity scheme announced today as part of its housing strategy.
It says Barclays, HSBC, Lloyds Banking Group, Nationwide, Royal Bank of Scotland, Santander and Yorkshire and Clydesdale Banks have agreed in principle to participate in the scheme, which will see them lend up to 95 per cent LTV on new-build property.
The Government will underwrite part of the risk on the loans alongside house builders.
Over 25 developers have agreed in principle to join the scheme, including Barratt, Persimmon and Taylor Wimpey, the three largest builders in the UK.
It says it hopes other lenders and builders will want to participate in the scheme.
Under the scheme, the builder will contribute 3.5 per cent of the value of each property sold under the scheme into an indemnity fund, with the Government supporting the fund to a total of 9 per cent of the property’s value.
The indemnity fund pays out to the lender if a property financed under the scheme is repossessed and there is a shortfall. Builders will take the first loss, with the Government only being called upon to pay once the builder’s fund has been exhausted.
Lenders and builders will retain the right to decide which builders and lenders they wish to engage with. The Government will establish a delivery group of lenders and builders to meet with on a regular basis to monitor the practical implementation of the scheme.
There will be a cap on the value of properties eligible for inclusion in the scheme.
The scheme will be delivered by the Department for Communities and Local Government and will be available in England only, although similar schemes are planned for Scotland and Wales.
The Government says it will conduct an evaluation of the scheme after two years, to ensure that there has been an appropriate and positive effect on the demand and supply of new build properties.