Three UK banks will this week begin offering potential house purchasers 95 per cent mortgages under the brought-forward second phase of the government’s Help to Buy scheme.
The Royal Bank of Scotland (RBS), NatWest and Halifax will start taking applications this week, with HSBC and Virgin Money joining later in the year.
For a 5 per cent deposit, RBS and its Natwest subsidiary have revealed that they will be offering two and five-year fixed rate deals at 4.99 per cent and 5.49 per cent interest rates respectively with no fee. The brands expect a rush of interest and have confirmed that 740 of their branches will be extending opening hours for two weeks to cope with the expected demand.
Halifax, meanwhile, will take applications with the same deposit at a rate of 5.19 per cent with a £995 fee.
The Royal Institution of Chartered Surveyors (Rics) said yesterday that a large majority of surveyors were expecting house prices to rise over the coming months as a result of the scheme, although the government is confident the scheme will only help those who can’t afford to buy homes in areas where prices are not booming onto the property ladder.
That said, Deputy Prime Minister Nick Clegg has warned that the scheme can and will be stopped if it is found to not be having the desired impact.
“From what I have seen, looking at it very closely, I don’t believe that the overheated parts of the London housing market where clearly prices are galloping ahead, which is not the case in other parts of the country… I don’t believe that this second part of the Help to Buy scheme is suddenly going to make that escalation in London prices qualitatively worse, that’s already happening,” he explained.
“But – a big but – of course we need to be vigilant, of course we need to moderate it, even turn it off if we think that it is not appropriate and is providing inappropriate stimulation to the housing market.
“That is precisely why we have transferred the right to do that to the Bank of England so that they can keep an eye on it – not politicians, not George Osborne, not the Treasury – they can look at, if they don’t think it’s working, or it’s inappropriate, they can change it or even recommend that it’s stopped altogether.”