Belfast Telegraph

Thursday 23 October 2014

Santander joins Help to Buy scheme

Santander has added its name to the list of mortgage lenders joining the Government's flagship Help to Buy scheme

Another major mortgage lender has confirmed it will join the Government's flagship Help to Buy scheme, as banks reported strong levels of interest from aspiring home owners.

Santander has added its name to the list and will start offering the state-backed low-deposit deals from January, meaning that lenders representing around half of the mortgage market have now committed to the scheme.

Royal Bank of Scotland (RBS), NatWest, Halifax and Bank of Scotland, are all offering Help to Buy mortgages from this week.

RBS/NatWest launched their products on Tuesday and Halifax and Bank of Scotland will offer deals from tomorrow.

Of the biggest mortgage lenders, only Barclays and Britain's biggest building society Nationwide have yet to say whether they plan to come on board and both said they were mulling over the details.

HSBC, Lloyds Bank, Virgin Money and Aldermore have all confirmed they plan to join up.

A spokeswoman for RBS/NatWest said that levels of interest had been high, with potential customers having booked around 5,000 appointments in branch and over the phone to discuss its mortgage products, including its Help to Buy deals.

Would-be applicants have been viewing RBS and NatWest's new online Help to Buy pages at a rate of 40 times a minute.

The banks' two-hour mortgage appointment slots are fully booked for this week and are starting to fill up for next week.

The spokeswoman said it was "unusual" to see a whole week's worth of appointments filled by mid-week.

Meanwhile, a Halifax spokeswoman said the lender was seeing a "strong number of inquiries" even before it opened the applications process.

RBS/NatWest is offering a fee-free two-year fixed rate deal at 4.99% for buyers with 5% deposits under the new phase of Help to Buy, which some analysts have said puts it ahead of other providers so far.

A similar two-year deal with a fixed rate at 5.19% and a £995 product fee will be available through Halifax and Bank of Scotland from tomorrow.

Before the new phase of Help to Buy was launched, only a handful of providers were offering deals to people with deposits as low as 5%, with just 44 products available compared with 700 products for people with a 20% deposit to choose from.

The most competitive and widely available two-year fixed-rate mortgage before Help to Buy for those with a 5% deposit was a product with a 5.95% rate and a £195 fee from Newcastle Building Society , according to financial information website Moneyfacts.

But the scheme, which sees the Government offer £12 billion worth of guarantees to support more low-deposit mortgage lending to credit-worthy people who have previously found themselves "frozen out" of the housing market , has also raised concerns that it will fuel a house price bubble by encouraging borrowers to stretch themselves too far.

Experts have pointed out that if a home buyer saved for long enough to raise a 10% deposit instead of just 5%, they would have access to products offering rates as low as 3.99%.

The Government has said that lenders offering these deals would still have tough checks in place as they would with other mortgages to make sure borrowers could afford their repayments.

Confirming Santander's involvement, a spokeswoman for the lender, whose total mortgage market share is around 13%, said it would give more details about its plans nearer to the January launch date.

She said: "Nearer the time, we will confirm details of products and the application process.

"Some lenders are already taking applications for the scheme ahead of the January launch date.

"This is not something we are currently choosing to do."

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