Lenders have increased the rates on mortgage products they developed for the Government’s indemnity guarantee scheme just over seven weeks after its launch.
Under the NewBuy scheme, which launched in March, lenders offer 95 per cent loan-to-value ratio mortgages on newbuild 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 fixedrate NewBuy mortgages by 0.2 per cent and 0.1 per cent respectively, meaning it now offers a 5.89 per cent threeyear fixed rate and 6.09 per cent five-year fixed rate. Barclays has replaced its 4.99 per cent two-year fixed rate and 5.89 per cent fouryear 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.”