How to Double First Time Buyer Lending

According to a recent post from HouseBuilder, one way to increase the number of 95% mortgages for buyers would be to go back to a mortgage indemnity guarantee scheme which “supports buyers looking to borrow 95% mortgages” and according to Stephen Noakes, head of mortgages for Lloyds who spoke at the HBF Policy conference, this “would double lending to first time buyers”.

The release goes onto say, “that this could only happen with a whole market solution involving lenders and triple A insurers.” Apparently a meeting to look at potential solutions involving housebuilders, lenders and insurers is planned for May.

What was interesting is that when “Noakes was asked why there was discrimination against new build loans in terms of the level of loan to value (LTV) available, he said that was because the risk of lending on new build had been higher historically, but this was now coming down in line with the second hand market.”

As such you’d expect a lender effectively owned by the government would then conclude that “Lloyds' LTVs on new build would not change until other lenders across the industry were ready to reassess the risk and also adjust their LTVs on new build.”

Kate Faulkner comments that “this shows that lenders still don’t seem to get the housing market at the moment. Now is a good time to buy as long as people are vetted on their ability to pay the mortgage on-going. New builds in my view don’t appear to be the risk they were some years ago, but four years into a credit crunch, lenders still haven’t moved on, and even if they do think they are riskier, support from the tax payer hasn’t helped them to appreciate how important supporting the building of new homes is in to the future is.”