Halifax Help to Buy mortgage rates unveiled
Britain’s biggest lender is expected to announce the interest rates on its Help to Buy mortgage rates next week.
Halifax will offer rates under 5 per cent and accept applications by the end of the year, according to industry sources.
It will be welcome news to first-time buyers and homeowners who are looking to move with just a five per cent deposit.
As Zoopla revealed yesterday, borrowers can not only now apply for a mortgage using the new Help to Buy guarantees following the Government’s announcement at the beginning of this week, but they can also receive the mortgage money before the guarantees cut in on January 2.
It is impossible to default on the mortgage in the time between now and when the guarantees begin, so lenders are agreeing to hand over the cash before the deadline. If borrowers default after January 2, the lender will be covered by the mortgage guarantee.
A source told Zoopla: “We expect the rates to come in below 5 per cent and we expect applications to be accepted by Halifax before the end of next week.”
Under the new mortgage guarantee scheme, the buyer would only need a 5 per cent deposit.
The Government and the bank then jointly guarantees up to the next 15 per cent of the property’s value, in return for a fee paid for by the lender.
It follows the introduction of the first phase of Help to Buy – equity loans – earlier this year. Under this phase, the Government provides a loan of up to 20 per cent of the price of a property, with the borrowers providing a 5 per cent deposit and a mortgage of 75 per cent.
The scheme is proving popular with buyers as figures show registrations for new homes are up 25 per cent in a year.
Registrations for new homes climbed to almost 91,000 during the first eight months of this year, up from less than 73,000 during the same period a year earlier.
In particular, the three months from June this year – just two months after the scheme was introduced – saw a sharp increase compared to the previous year, up 15 per cent, according to insurers NHBC.
The latest news about Halifax comes as another high street lender reveals research about the biggest barriers to getting onto the housing ladder.
The survey by Santander suggested 16 per cent cite the most significant obstacle being not having enough money for a deposit.