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Brokers blast David Cameron’s ‘ridiculous’ Help to Buy 2 claims

Prime Minister David Cameron says Help to Buy has cut mortgage bills by £2,500 a year.

Brokers have hit out at Prime Minister David Cameron’s “ridiculous” claims that the second phase of Help to Buy has cut mortgage bills by £2,500 a year.

Help to Buy 2 allows borrowers to access 95 per cent loan to value deals through a 15 per cent Government guarantee on properties worth up to £600,000.

Writing in The Sun newspaper, Cameron said: “This is not just cutting deposits, it’s cutting mortgage bills. A mortgage for a Help to Buy property at average price is £2,500 a year cheaper.”

NatWest offers Help to Buy fixed rates from 4.99 per cent, while Halifax offers fixed rates from 5.19 per cent.

Data compiled for Money Marketing by Moneyfacts shows of the top five 95 per cent LTV deals available outside of Help to Buy, two lenders offer cheaper headline rates.

The Government is comparing the average cost of Help to Buy 2 deals available now with average two-year fixed rates at 95 per cent LTV available in 2007.

A Number 10 spokesman says this is because 2007 was the last time 95 per cent LTV deals were widely available.

John Charcol senior technical manager Ray Boulger says it a “ridiculous comparison”.

He says: “There are lies, damn lies and statistics. If you want to go down the opposite route then in 2007 the differential on a 95 per cent LTV mortgage and Bank base rate was around 1 per cent whereas now, even with Help to Buy, it is around 4.5 per cent. It is a rather stupid argument.”

Your Mortgage Decisions director Dominik Lipnicki says: “The risk to the lender is not 95 per cent so they are not comparing apples with apples.”

Moneyfacts financial expert Rachel Spingall says: “The guarantee offered by the Government essentially makes Help to- Buy deals 80 per cent LTV. On this basis comparing Help to Buy rates with 20 per cent deposit deals means the rates are less attractive.”

Help to Buy 2 rates        
Lender Rate Details Maximum
LTV
Fees Other Features
NatWest 4.99% Fixed to 31/03/2016 95% None No arrangement fees. No Higher Lending Charge (HLC).
Help to Buy 
Royal Bank of Scotland 4.99% Fixed to 31/03/2016 95% None No arrangement fees. No Higher Lending Charge (HLC).
Help to Buy 
Halifax 5.19% Fixed to 29/02/2016 95% £995, No Higher Lending Charge (HLC).
Help to Buy 
Halifax 5.19% Fixed to 31/12/2015 95% £999, No Higher Lending Charge (HLC).
Help to Buy 
NatWest 5.49% Fixed to 31/03/2019 95% None No arrangement fees. No Higher Lending Charge (HLC).
Help to Buy 
Royal Bank of Scotland 5.49% Fixed to 31/03/2019 95% None No arrangement fees. No Higher Lending Charge (HLC).
Help to Buy 
         
Top Five Fixed Rates at 95% – (non-Help to Buy 2)      
Lender Rate Details Maximum
LTV
Fees Other Features
Furness BS 4.75% Fixed for 5 years 95% None No arrangement fees. No Higher Lending Charge (HLC).
Branch interveiw required.
Hanley Economic BS 4.89% Fixed to 31/12/2015 95% £250, Free valuation fees (Max £240). £250 rebate. No Higher Lending Charge (HLC).
Loughborough BS 4.99% Fixed for 5 years 95% £99, To 90% No Higher Lending Charge (HLC)
 
Clydesdale Bank / Yorkshire Bank 4.99% Fixed to 31/01/2017 95% None Free valuation fees. No arrangement fees. £250 rebate. No Higher Lending Charge (HLC).
Leeds BS 5.19% Fixed to 31/12/2018 95% £800, No Higher Lending Charge (HLC).
         
Source:     Compiled: 12.11.13
Moneyfacts.co.uk        

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