Lenders have increased the rates on products they developed for the Government’s indemnity guarantee scheme less than two months after its launch.
Under the NewBuy scheme, which launched in March, lenders offer 95 per cent loan-to-value mortgages on new-build properties against a mortgage indemnity guarantee funded jointly by builders and the government up to 9 per cent of the property value.
At the scheme’s launch, NatWest, Barclays and Nationwide Building Society launched specific products for the scheme. But since then, all three have made changes to these products.
NatWest has increased the rate on its products by 0.5 per cent, meaning it now offers a two-year fixed at 4.79 per cent and five-year fixed at 5.49 per cent.
Nationwide has increased its three and five-year fixes by 0.2 per cent and 0.1 per cent respectively, meaning it now offers a 5.89 per cent three-year fixed and 6.09 per cent five-year fixed.
Barclays has replaced its 4.99 per cent two-year fixed rate and 5.89 per cent four-year fixed with a 6.09 per cent three-year fixed.
NatWest only distributes its NewBuy mortgages direct, Barclays will distribute both through intermediaries and direct while Nationwide only distributes through intermediaries.
Last month, Halifax launched a two-year fix at 5.99 per cent and another at 6.39 per cent which is fee-free.
Your Mortgage Decisions director Dominik Lipnicki says: “It is taking advantage of people who have small deposits. It means fewer people will be able to afford to take out the mortgage, when the point of the scheme was to ensure more could.”