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Barclays to join Help to Buy mortgage scheme | Barclays to join Help to Buy mortgage scheme |
(34 minutes later) | |
Barclays has become the latest bank to announce it is signing up to the government's Help to Buy scheme. | Barclays has become the latest bank to announce it is signing up to the government's Help to Buy scheme. |
This means lenders representing well over 50% of the UK's mortgage market have said they will sign up to the project. | This means lenders representing well over 50% of the UK's mortgage market have said they will sign up to the project. |
The government's initiative is designed to allow those who can afford only small deposits to buy a home. | The government's initiative is designed to allow those who can afford only small deposits to buy a home. |
The move leaves Nationwide Building Society as the UK's only major mortgage lender yet to decide whether to join. | The move leaves Nationwide Building Society as the UK's only major mortgage lender yet to decide whether to join. |
Affordability checks | |
Barclays has not yet published details of any rates or timing of mortgage products that fall under the Help to Buy umbrella. | |
"We are pleased to confirm that Barclays will participate in the Help to Buy mortgage guarantee scheme," a spokesman for the bank said. | |
Under the latest phase of the scheme, buyers across the UK only need to provide a small deposit, with the government offering a guarantee of 15% of the loan to the lender - for a fee - to encourage the bank or building society to offer the loan. | |
That fee charged to the lender is up to 0.9% of the original loan level. This is a one-off fee dealt with entirely by the lender, which guarantees 15% of the mortgage for seven years. | |
Borrowers who apply will face checks to make sure that they can afford the mortgage payments. | |
The scheme will be available for first-time buyers and home movers borrowing to buy new and old homes valued at no more than £600,000. It is expected to continue for three years. | |
Market correction | |
Products are already on the market from RBS/NatWest and the Halifax, with Santander, HSBC, Virgin Money, Lloyds, TSB and Aldermore all saying that they will start offering products by the start of January. | |
The government has said that the scheme will correct a problem in the market that locks out a number of tenants paying high rents and unable to save enough for a deposit, even though they could afford mortgage repayments. | |
But Labour said the focus should be on house building, to correct a lack of supply of affordable homes. | |
The latest news of Barclays' participation comes as mortgage lenders reported that the number of first-time buyers was already growing quickly from a low base. | |
The Council of Mortgage Lenders said that the number of loans approved for first-time buyers rose by 33% in August compared with the same month a year earlier. |