Yorkshire bypasses � and betters � Help to Buy mortgages

Wed 20 Nov 2013

Britain's second biggest building society has bypassed the Help to Buy scheme and launched the largest range of 95% mortgages available from any lender at interest rates that beat those offered under the government initiative.

Yorkshire building society has launched 36 mortgages aimed at buyers who can only raise a 5% deposit, none of which draws on the taxpayer guarantee offered in the second phase of the Help to Buy scheme launched in October. Interest rates start at 4.59%, compared with 4.99% for the government-backed deals.

The society said it was delivering on the scheme's aims "without relying on government support", and suggested its decision to go it alone may be linked to a survey it did of buyers revealing "a level of doubt" about Help to Buy. Its showed many would-be buyers favoured "traditional" home loans over those that incorporate a government mortgage guarantee.

Under phase two of Help to Buy, which launched three months earlier than planned, banks and building societies that want to offer low-deposit mortgages can buy a guarantee on the "top slice" of the home loan – the part between 80% and 95% – and if the house is repossessed, the government will cover a chunk of any loss. Banks offering Help to Buy deals include Royal Bank of Scotland and its NatWest arm, and Halifax.

The Yorkshire said it was launching so many 95% mortgages – all are two- and five-year fixed-rate deals – because each of its five brands would have its own range, and it wanted to offer a variety of different options. The group includes three other building society brands – the Chelsea, Norwich & Peterborough and Barnsley - plus the broker-only lending arm Accord Mortgages.

Source; The Guardian

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