NewBuy reservations to reach 1,500
A scheme to give home buyers with smaller deposits a helping hand to buy a new-build property is set to hit a milestone of 1,500 reservations this weekend, six months after its launch.
The figures were released by the Home Builders Federation (HBF), as those involved in the NewBuy Guarantee scheme predicted activity will pick up further as the autumn selling season gathers pace.
However, some calls have been made for lenders to lower their rates on NewBuy mortgages, given the lower-risk nature of the Government-backed mortgage indemnity scheme, which allows first-time buyers and home movers to purchase a home with as little as a 5% deposit.
The HBF's reservations figure refers to people who have found a home they want to buy and have had a mortgage approved. The HBF said the figure stands at around 1,490 on Friday, and it expects the 1,500 mark to be reached over the weekend.
The scheme has come in for criticism from some builders, who believe lenders could be making NewBuy rates even more competitive due to the safety net behind the initiative.
Calls have also been made to broaden the scheme out to second hand homes, which could help those who do not want to buy a new-build home and existing homeowners who are struggling to sell in the tough market.
Developers put 3.5% of the value of every NewBuy home sold into a pot which is used to protect the lender in the event of a default. The Government has guaranteed the scheme if these funds are not large enough to cover a lender's losses.
Earlier this week, builder Redrow described take-up of the scheme so far as "disappointing" and said that just 63 customers had chosen to use the scheme with many more discouraged by the "high interest rates" charged by some lenders. Redrow called for the scheme to be extended to the second hand market to stimulate demand across the whole housing sector.
A spokesman for home builder Barratt said: "We would agree with Redrow that there is scope for the rates to come down a bit, and we would hope that that would be the case as the scheme grows in importance. Ultimately there will be competition and hopefully it will result in lower rates."
© 2012 Press Association