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Did Govt force lenders into early rollout of Help to Buy 2?

Brokers are sceptical that the Government’s decision to bring Help to Buy 2 forward by three months will translate into real benefits for borrowers.

Though several major lenders have signed up to the scheme, only Royal Bank of Scotland, NatWest and Halifax are currently accepting applications. HSBC, Santander, Barclays, OneSavings Bank Aldermore and Virgin Money have simply stated their intention to commit to the scheme later this year or in 2014.

The first phase of Help to Buy has already boosted the housing market. Since the shared equity scheme for new-build homes launched in April, more than 15,000 reservations have been made through the scheme. 

The second phase applies to existing homes as well as new builds worth up to £600,000, with the Government guaranteeing up to 15 per cent of the property’s value in return for a fee from the lender. The £12bn scheme began rolling out last week, with 95 per cent deals starting at 4.99 per cent.

Due to the launch date of Help to Buy 2 being brought forward from January 2014 to this month, many lenders are watching and waiting to see how RBS, NatWest and Halifax fare in their involvement in the scheme.

A Treasury spokesman says it was mere coincidence that the only banks accepting applications now were state-backed.

He says: “The state-invested banks were given the same information about the timing of the scheme as other lenders. I can see why some people put two and two together and get five from this but it is entirely coincidental.”

While Halifax has launched its products through both broker and direct channels, NatWest has prioritised direct access before opening its Help to Buy 2 range to brokers.

The lender issued a statement last week claiming it needed to update its IT systems to give brokers access to Help to Buy rates. 

But a NatWest spokes-man says the bank had always planned to roll the scheme out through one channel before the other. When Help to Buy 2 was brought forward, the priority was the direct channel. The bank plans to offer brokers Help to Buy 2 rates “as soon as possible.”

Brokers believe the early launch was politically motivated. Furthermore, some intermediaries have suggested those lenders who have announced their product details may have had forewarning from the Government.

John Charcol senior technical manager Ray Boulger says: “There was clearly a political motivation for the Tories to bring the second phase forward, and you don’t have to be cynical to work out the only participants thus far are the two partly state-owned banks.

“Even though they have managed to launch early, they probably could not have done that without having an inside track. That itself raises an interesting question because, under the EU state aid rules, the Government cannot provide any subsidy for lenders but has to treat them all equally.”

Boulger also takes issue with the branding of the mortgage indemnity part of the scheme as Help to Buy, given its different nature to Help to Buy 1.

He says: “All mortgage promotions have to be clear, fair and not misleading, and one of the biggest aspects of the way people misunderstand Help to Buy is that these two very different schemes have the same name.

“If it wasn’t for the Tories wanting a good Budget headline, the Chancellor should have given the second scheme a different name to make this clear. 

“There’s one rule for the Government and another for everyone else. Obviously, the Chancellor thinks he is above the regulatory requirement.”

Chadney Bulgin mortgage partner Jonathan Clark says: “Whether or not these early lenders had an inside track is difficult to say. They managed to get their offering out straight away, so you would have to say it is a possibility.”

Clark says a wider range of Help to Buy 2 deals may not materialise while other lenders gauge the market.

“Barclays, Santander and the like could have come out with their deals just as quickly as the others if they wanted to, but I don’t think they did. They will sit back and watch what happens in the market.

“It is similar to Help to Buy 1, where Woolwich announced its product first and no one took it up. But as soon as other banks saw a bit of competition they all piled in, and now we have numerous lenders taking part.”

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