View more on these topics

NewBuy rates do not reflect scheme’s risk profile, says Redrow

Property developer Redrow says the Government’s NewBuy scheme is being undermined because lenders are failing to bring down their rates to reflect the risk profile of the initiative.

The group’s latest financial results, published this week, says while the scheme has been welcomed by the industry, it has not “enjoyed the success it deserves”.

It says: “The take-up so far has been disappointing with just 63 customers choosing to use the scheme, with many more discouraged by the high interest rates charged by most of the participating lenders.”

A Council of Mortgage Lenders spokesman says: “Lending rates need to reflect all the risks that are associated with higher LTV lending and there are some risks that are not covered by this scheme. Two principle risks include the risk of default and the losses that might arise from the default. Losses from default will be covered in most cases but may not necessarily fully covered.The risk of loss itself is not covered and that is something a lender has to take into effect when pricing the products.”

Barclays, Halifax, NatWest, Santander, Aldermore and Nationwide currently offer NewBuy mortgages, providing a 90 per cent to 95 per cent LTV mortgage for buyers.

Aldermore currently offers two and three-year fixed rates at 5.48 per cent. Halifax reduced its NewBuy 95 per cent LTV by 0.10 per cent to 5.89 per cent in July.

Barclays reduced its three-year fixed rate NewBuy mortgage from 5.69 per cent to 5.49 per cent in September. NatWest has a two-year fixed rate product at 4.49 per cent and a five-year deal at 4.79 per cent.

Nationwide has three-year fixed rates starting at 5.49 per cent and five-year fixed rates starting at 5.59 per cent for new borrowers.

Santander reduced its NewBuy mortgage rates by up to 0.7 per cent in August. The lender’s three-year fixed rate was reduced from 5.49 per cent to 4.99 per cent, while its five-year fixed rate was cut from 5.49 per cent to 5.29 per cent and its seven-year fixed rate was reduced from 5.99 per cent to 5.29 per cent.



Martin Bamford: MAS, I want my money back

I am pretty confident that most of us would agree that we need to educate members of our society about the importance of money management and planning for their financial future. After all most IFAs deliver loads of education, information and guidance as well as financial advice, financial planning and investment advice, as part of […]


Govt consults on Bank of England powers to cap LTVs

The Government has today launched a consultation on the macro-prudential powers that could be given to the Bank of England’s Financial Policy Committee, including the power to cap mortgage loan to values. In its paper, The Financial Services Bill: the Financial Policy Committee’s macro-prudential tools, the Treasury is consulting on which tools the FPC should […]


Towry agrees £47.3m refinancing deal

Towry has agreed a £47.3m refinancing deal with Macquarie Bank and Royal Bank of Scotland to boost capital and drive the growth of the business. The proceeds of the debt issuance, made up of £42.5m in senior and junior loans from Macquarie and £4.8m of senior debt from existing lender RBS, were used to repay […]


FoI reveals lack of accountability over PPI misselling

The FSA has not brought any enforcement cases against individuals for the misselling of payment protection insurance in the last three years and says it has no plans to do so. London-based IFA Wexdon Financial Services submitted a Freedom of Information request to the regulator to find out whether individuals have been held to account […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm