Barclays joins Help to Buy scheme

BarclaysAnother major mortgage lender is to join the Government's flagship Help to Buy scheme, meaning that providers covering around two-thirds of the market are now on board.

Barclays confirmed that it plans to lend state-backed mortgages under the new phase of Help to Buy, which was fired into action this week after the Government brought the launch date forward from January.

But the bank, which accounted for around 13% of mortgage lending last year, has not given any detail of what products are on offer and when they will be available.

The Government is offering £12 billion worth of guarantees under Help to Buy to encourage lenders to offer mortgages to credit-worthy home buyers with deposits as low as 5%.

So far, just a handful of lenders have launched products under the new phase of Help to Buy, with state-backed Royal Bank of Scotland (RBS), NatWest, Halifax and Bank of Scotland taking applications from this week.
Of the biggest mortgage lenders, only building society Nationwide, which had a mortgage lending share of around 15% last year, is still to decide whether or not it plans to take part.

Those other lenders who have confirmed their participation - Santander, HSBC, Lloyds Bank, Virgin Money and Aldermore - are expected to give more details about the deals they plan to offer nearer to their launch dates.

Some more products are expected to appear on the market later this year, followed by another wave of new deals in about January - the time the scheme was originally due to start.

Barclays' brief announcement on Twitter said: "We are pleased to confirm that Barclays will participate in the Help to Buy mortgage guarantee scheme."

A spokesman for the bank declined to give any details about the mortgage products that will be available or exactly when customers will be able to take out these deals, saying more information will be announced "in due course".

Halifax and Bank of Scotland started taking applications under the new Help to Buy scheme today. The lender is offering borrowers with a 5% deposit a two-year fixed-rate deal at 5.19% with a £995 product fee.

RBS and NatWest were the first to offer products under the scheme, including a similar two-year fee-free fixed rate deal at 4.99%. RBS/NatWest started taking applications on Tuesday.

While the new scheme is expected to spark more competition and widen borrower choice as the major players return to the 5% deposit market, experts have pointed out that the rates on offer so far under Help to Buy are not hugely different from what was already available.

Yorkshire and Clydesdale Banks, which are still deciding whether or not to take part in Help to Buy, today cut the rate on a three-year fixed rate mortgage to 4.99% for people with a 5% deposit.

As well as rivaling the rate being offered by NatWest with their fee-free deal, Yorkshire and Clydesdale are also offering borrowers £250 cashback on completion.

Help to Buy has fuelled fears of a housing boom as it comes at a time when house prices in London and the South East in particular have already been rising strongly as demand from potential buyers has been outstripping the supply of homes on the market.

Figures released by the Council of Mortgage Lenders (CML) today showed that lending to first-time buyers had already reached its highest levels since 2007 before the scheme was launched.

Those providers who have started offering new Help to Buy mortgages have reported strong interest so far from aspiring homeowners, with RBS/NatWest experiencing full mortgage appointment bookings and seeing their Help to Buy online pages viewed 40 times a minute.

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.

But borrowers taking out a Help to Buy mortgage will still face tough checks to make sure they can afford repayments.

© 2013 Press Association