The scheme allows credit-worthy borrowers to buy a new-build or an older home with a 5% deposit and a state-backed mortgage which removes some of the risk for the lender if the borrower defaults. The Government has just announced that this incentive encouraged more than 2,000 people to put in offers on homes in the first month of the initiative’s launch, totalling £365 million of new mortgage lending.
The reason for the scheme is mainly that deposit mortgages have been harder to come by since the financial downturn, but the new figures show around 75 families a day are taking up the scheme.
State-backed lenders Royal Bank of Scotland (RBS), NatWest, Halifax and Bank of Scotland started offering products under the new phase of Help to Buy last month and HSBC has also just unveiled two new deals it plans to offer under the scheme. HSBC will offer borrowers with a 5% deposit a two-year fixed-rate deal with a rate of 4.79% and a five-year fixed-rate at 4.99%. Both of the products have a £99 booking fee.